GBPUSD news - page 84
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GBP/USD forecast for the week of March 21, 2016 The GBP/USD pair initially fell during the course of the week and then turn right back around as we found the 1.40 region to be supportive enough to turn things back around and form a hammer. Consequently, we have found quite a bit of volatility and support due to the fact that the Federal Reserve has suggested that there will be less likely to pile on interest-rate hikes this year. There may be a couple, but quite frankly there are going to be anywhere near as many as previous not. With that being the case, if we can break above the top the hammer that is a buy signal.
Cable Corrects Last Week's Gains The pound has been under pressure since the market opened on late Sunday and cable was spotted 0.6% lower during the Frankfurt session on Monday, trading around $1.4380.
It looks like investors are liquidating their long positions from last week, which pushed the pair nearly 5 big figures higher from last week's lows. The pair hit stop losses below the $1.44 mark, which helped to push sterling further lower, with the daily outlook now looking negative.
Sterling traders might keep an eye on today's CBI trends for March, although no elevated volatility is expected after the numbers. Moreover, Bank of England Monetary Policy Committee member Kristin Forbes will deliver a speech at the Official Monetary and Financial Institutions Forum roundtable in London.
Tuesday will bring inflation indices from the UK, including CPIs, HPIs, RPIs and PPIs. The headline CPI numbers are expected to slightly improve from previous levels, which might support the pound on currency markets.
The data flow will continue on Thursday with retail sales for February. Analysts are projecting a notable decline from previous levels and retail sales should post a negative reading.
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Pound Falls as Brussels Attacks Bolster 'No to EU' Campaign The British pound was hit hardest by the Brussels explosions, as the fresh round of terror on the continent threatens to bolster support for the 'leave Europe' mob.
Tasteless European Union (EU) detractors have already jumped on the strategy as a way to score political points, with head Euro-cynic and UKIP leader Nigel Farage tweeting that "Brussels, de facto capital of the EU, is also the jihadist capital of Europe", while also using the event to say Britain would be safer out of the union.
This view is shared by many who would vote to leave the union, though not one shared by European-wide police agency Interpol, who argued in February that it would be harder for the UK to fight terrorism while following an isolationist path. The UK would cease to have access to the intelligence infrastructure which helps protect them against terror.
Events such as the terror that unfolded earlier on Tuesday in Brussels tend to increase support for the UK to leave the EU. In a 2,000 person sample poll, an ORB survey for the Independent newspaper showed support for the 'Leave' campaign had surged 4% after similar attacks in Paris.
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GBP: Recovery Only After The EU Referendum; Where To Target? Intensifying Brexit fears have been keeping the GBP under selling pressure so far this year. Lingering Brexit fears and weakening data of late have added to the headwinds for GBP.
We expect the UK to remain part of the EU after the June referendum and think that the latest GBP underperformance will be temporary. Indeed, we expect the GBP to embark on a gradual appreciation trend in H2 2016 and in 2017.
Abating Brexit concerns, the unwinding of excessive market shorts as well as valuation considerations (GBP looks undervalued against USD) could help the currency recover later this year. In addition, rate expectations being somewhat out of line with the UK’s longerterm price outlook supports such a view.
In fact, medium-term inflation expectations as measured by 5Y forward breakeven rates remain close to 3%, irrespective of more muted external factors, such as weak commodity price developments, dampening the impact. This may be indicative of constructive domestic conditions, which should ultimately be reflected more in strengthening wage price developments. If so, investors may be quick to re-assess their view of the BoE’s monetary policy stance to the benefit of the currency.
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Sterling Erases Last Week's Gains on Brexit Fears Sterling took another hit after the Brussels attack fueled fears about terrorist attacks and immigration, pushing the probability of a successful Brexit referendum higher, with the outlook for the currency gloomy.
The pair traded 0.20% lower at $1.4180 during the European trading session, losing nearly 4% since the start of the year.
Investors' main concern regarding the pound is the fear of the UK leaving the European Union in the June referendum, resulting in significant weakening of the country's economy and currency. Any information showing the UK closer to leaving stomps sterling further into the ground.
The outlook for the currency looks dim, as it is trading below all relevant moving averages and there is no obvious support that might hold the pair in the days and weeks to come. Fundamentals offer no solace either, as Brexit's chances are growing with each public problem in the EU, be it the great influx of refugees or another terrorist attack.
A new poll taken in the wake of the Brussels attacks showed 41% preferred staying in the bloc, while 43% of respondents preferred to leave. The poll was published on Wednesday morning,
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Sterling Recovers, Brexit Fears Still in Background Sterling recovered and traded higher after UK retail sales data on Thursday, temporarily easing the losses based on fears that Britons will vote for leaving the EU as the latest polls showed pro-Brexit voters leading ahead of the June 23 referendum.
The pair traded 0.14% lower at $1.4099, breaking the $1.41 handle and now trading more than 4% lower since the start of the year.
The latest release from the Office for National Statistics (ONS) on Thursday showed that retail sales volumes on UK high streets declined between January and February less than anticipated. Total retail sales volumes fell on a monthly basis by 0.4% in February, less than the estimated 1% decline, and down from a surge of 2.3% a month before.
The chances of a Brexit have grown after the terrorist attacks on Brussels airport and a metro station, which worsened fears about Europe's security and convinced more UK citizens that they would be better off outside the bloc.
The latest polls showed 43% respondents in favor of leaving and 41% wanting to remain inside the bloc, with a large part of the electorate still undecided. This creates downward pressure on the pound, pushing the pair lower.
Moreover, the pair is under pressure from the greenback side too, as the dollar grew against all major currencies after a speech from James Bullard, President of the St. Louis Federal Reserve (Fed), in which he stated that the improving jobless rate might force the Fed to raise interest rates rather sooner than later.
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Sterling Boosted by Retail Sales, Brexit Still a Concern Following the optimistic retails sales, sterling rebounded from lows, but Brexit worries still support bears on the pair.
Sterling gained 0.37% against the dollar on Thursday and recently traded at 1.4166 versus the US currency.
Retail sales fell 0.4% in February from the previous month when they soared 2.3% because of heavy discounting in the sales season. Economists expected a 1% drop from January. Excluding fuel, retail sales dropped 0.2%, less than the 0.7% decline predicted by economists.
"While there are some headwinds to spending growth, the outlook remains fairly bright," Paul Hollingsworth, an economist at Capital Economics, wrote in a note.
The key support level to watch on Thursday for the pair was $1.4050, according to Chris Beauchamp, analyst at IG in London. If the pound sustainably surpasses that, ‘’we could see a bounce back towards $1.42, and then perhaps on towards $1.4320," he wrote on IG’s website.
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GBP/USD forecast for the week of March 28, 2016 The GBP/USD pair fell significantly during the course of the week, showing the 1.45 level above to be resistive. Because of this, the market should continue to consolidate as we have seen in the past, with the 1.40 level below being massively supportive. It’s hard to get excited about trading this market from a longer-term perspective as long as we stay between these two levels. Given enough time, we will get an impulsive candle that we can trade, but so far we do not have it. With this, we will have to stay on the short-term charts
UK Market Insight: Brexit Risk Resonates in UK Economic Growth Outlook Economic growth in the UK has so far remained resilient to the headwinds blowing from overseas. The third and final official estimate of gross domestic product (GDP), due next Thursday, is expected to confirm steady growth of 0.5% in the final quarter of last year.
The final GDP release is also expected to show that output in the robust services sector and household consumption were again the only two major segments pushing the economy forward.
Despite this resilience, grey clouds hang above Britain's economy, with nearly all major forecasters slashing their outlook for both growth and inflation. Risk of a Brexit, or detrimental infighting within the UK's largest political parties, are seen as the primary downside risks to stability and growth projections in the short and longer-term.
Sterling is no exception, with its exchange rate against major peers seen under pressure, as the June 23 EU referendum draws nearer and the risk of a Brexit intensifies.
Bank of England (BoE) policymakers argued at their March monetary policy meeting that it appears that the uncertainty surrounding the upcoming referendum was "likely to have been a significant driver of the decline in sterling." The BoE warned that this may also "delay some spending decisions and depress growth of aggregate demand in the near term."
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GBP/USD: Sterling Extends Gains to 9-Day Highs The market reaction to Federal Reserve (Fed) Chair Janet Yellen's dovish speech was fairly predictable, with the US dollar retreating sharply against most of its major peers including sterling, as the US dollar index dropped 0.78%.
Sterling added firm gains in the previous session and continued to rise on Wednesday, trading at the highest level since March 21. Shortly after the market open in Europe, the GBP/USD pair was up 0.44% at $1.4443.
The greenback is likely to remain center stage this week as markets will scrutinize both US data and more speeches from Fed officials that might alter the central bank's rhetoric.
"Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy. This caution is especially warranted because, with the federal funds rate so low, the FOMC's ability to use conventional monetary policy to respond to economic disturbances is asymmetric," Yellen said at the Economic Club of New York on Tuesday.
Yellen's dovishness contrasts with recent comments from Fed officials John Williams of the San Francisco Fed and Dennis Lockhart of the Atlanta Fed, who argued that an April move might still be in play.
"It is becoming quite apparent that the Fed is clearly split on the timing of when to raise rates," Michael Hewson from CMC Markets UK wrote in a research note on Wednesday.
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