GBP/USD forecast - page 14
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Barclays Forecast Undervalued Pound / Euro Rate to Recover to 1.30 by Early 2017
Barclays believe Pound Sterling undervalued at current levels and they projected it to move higher against the Euro over coming months.
The Pound recorded a fourth weekly loss gain against the Euro in the week ending 19th August.
In fact, since mid May the Pound has risen against the Euro in only two of eleven weeks.
Momentum therefore remains firmly pitted against Sterling and forecasts for further declines in the pair are understandable if momentum alone is considered.
But, there are some analysts who beleive a turn in fortunes for the GBP/EUR pair is nigh.
To us calling a continuation of an entrenched trend is easy - we are interested in hearing from those who are willing to stick their necks out there and call a turn in trend.
As such, resarch from Barclays has piqued our interest.
According to analysts, the decline in trade-weighted GBP following the announcement of the Bank of England’s larger-than-expected easing package on 4th of August has taken GBP to about 10% below its pre-Brexit level.
This is also one standard deviation (10%) below the estimated fair-value for the GBP it is argued:
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Sell a bounce in cable - Westpac
Westpac says to sell a 1.34 handle
GBP/USD is down 50 pips to 1.3179 but it's been in a short-term climb lately. If it continues, Westpac is poised to sell.
Tim Riddell at Westpac writes:
Short positioning is understandable given the scale of the BoE's multi-pronged easing. Auctions for the Bank's gilt purchases have gone well so far. The prospect of further expansion will cap GBP, the weakening of which is actually a part of the overall post-Brexit easing.
Nevertheless, recent data suggest that the immediate impacts of the Brexit vote have been mild. The British Bankers Association lending report may have shown that the number of mortgages fell, but it also stated that consumer credit has rebounded and "businesses also appear to be borrowing as usual."
As previously outlined, squeezes should be seen as selling opportunities, but they could force a test of the 1.34s before sliding once more to the post-Brexit low of 1.2800, if not the measured move and psychological level of 1.2500.
Yellen Triggers Wild Swings in British Pound / US Dollar Rate
The GBP/USD fell, then pushed higher by half a percent in the wake of the much-anticipated Janet Yellen speech at the Jackson Hole Symposium.
The Dollar was sold in the wake of Janet Yellen's Jackson Hole address despite the Chair of the US Federal Reserve saying an interest rate rise would take place in 2016.
Th market reaction would suggest more was expected from Yellen, we suspect what the Dollar bulls really wanted was a strong hint at a September interest rate rise.
Rather, it appears that December will be the delivery date.
Another point to make is that markets were getting far to excited by this event - perhaps because it fell in a week devoid of major economic releases and other events.
What tends to happen is that the masses focus on one event and over-cook its importance.
"It’s a case of nothing new from the Fed chair, sort of hawkish and sort of dovish. August is nearly over, thank goodness," says Neil Wilson at ETX Capital.
David Lamb, head of dealing a FEXCO Corporate Payments, gives a good insight into how markets reacted:
"The currency markets frequently live and die by the 'shoot first and ask questions later' motto. Today they were asking awkward questions just seconds after firing.
"No sooner had the Fed's Chair uttered the magic words 'the case has strengthened' and trigger-happy traders were snapping up Dollars in expectation of an near-immediate rate rise.
"But as the seconds ticked by, it became increasingly clear that a hike is inevitable, but not imminent.
"Cue a huge correction that saw the Dollar slump well below its pre-announcement levels – leaving many traders unable to see their terminals for the egg on their faces.
"The caveats came thick and fast. There's a range of possible rate rise scenarios, they could still be blown of course, and the killer line – gradual hikes are appropriate.
"All of which has led the Dollar bulls to be corralled back up and the expectation to fizzle out. It's back to business as usual for Dollarwatchers, as the Greenback's prospects remain strong but not stellar.
"Yellen's speech left the market it little doubt - while the US economy is performing well, few now expect a rate hike in September, or even before the year is out."
Yellen Triggers Wild Swings in British Pound / US Dollar Rate
The GBP/USD fell, then pushed higher by half a percent in the wake of the much-anticipated Janet Yellen speech at the Jackson Hole Symposium.
The Dollar was sold in the wake of Janet Yellen's Jackson Hole address despite the Chair of the US Federal Reserve saying an interest rate rise would take place in 2016.
Th market reaction would suggest more was expected from Yellen, we suspect what the Dollar bulls really wanted was a strong hint at a September interest rate rise.
Rather, it appears that December will be the delivery date.
Another point to make is that markets were getting far to excited by this event - perhaps because it fell in a week devoid of major economic releases and other events.
What tends to happen is that the masses focus on one event and over-cook its importance.
"It’s a case of nothing new from the Fed chair, sort of hawkish and sort of dovish. August is nearly over, thank goodness," says Neil Wilson at ETX Capital.
David Lamb, head of dealing a FEXCO Corporate Payments, gives a good insight into how markets reacted:
"The currency markets frequently live and die by the 'shoot first and ask questions later' motto. Today they were asking awkward questions just seconds after firing.
"No sooner had the Fed's Chair uttered the magic words 'the case has strengthened' and trigger-happy traders were snapping up Dollars in expectation of an near-immediate rate rise.
"But as the seconds ticked by, it became increasingly clear that a hike is inevitable, but not imminent.
"Cue a huge correction that saw the Dollar slump well below its pre-announcement levels – leaving many traders unable to see their terminals for the egg on their faces.
"The caveats came thick and fast. There's a range of possible rate rise scenarios, they could still be blown of course, and the killer line – gradual hikes are appropriate.
"All of which has led the Dollar bulls to be corralled back up and the expectation to fizzle out. It's back to business as usual for Dollarwatchers, as the Greenback's prospects remain strong but not stellar.
"Yellen's speech left the market it little doubt - while the US economy is performing well, few now expect a rate hike in September, or even before the year is out."