#EURGBP #ForexSignal: #Euro Falls Against #Pound After #ECB Meeting (12 April 2024)

• The euro has fallen against the British pound during the trading session on Thursday, breaking down below the 50-Day EMA.
• Ultimately, a lot of what we are seeing here is a simple continuation pattern of a potential accumulation phase.
• The market is currently dancing around the 0.8550 level, which is right in the middle of the overall range that we have been in for some time.

Underneath, we have the 0.85 level as a major support region, an area that has been tested multiple times. I think at this point in time, the market is likely to continue to look at that as a “hard floor” in the market, as it has been important more than once. The 0.86 level above is a major resistance barrier that a lot of people would pay close attention to, especially as the 200-Day EMA is sitting in that same area as well.

ECB Press Conference

The European Central Bank had an interest rate decision which of course was no change, but at this point in time, the market was paying more attention to the press conference afterward. Christine Lagarde suggested that the central bank would do something as soon as they think the inflation situation gets down to a reading of 2%. In fact, she even suggested that they were going to do things proactively down the road.

All things being equal, this is a market that I think is trying to form some type of accumulation phase and then bounce. The market is going to pay close attention to that 0.85 level, because it is so important from a longer-term technical analysis standpoint, and if we were to break down below there, it would obviously send the euro plunging. At this point, I don’t necessarily see that owning one currency over the other makes a huge difference, so I think we get a lot of back-and-forth more than anything else. However, we will eventually break out of this trading range, and once we do it’s likely that we will make a very significant move.

Potential signal

The EUR/GBP breaking above 0.86 has me buying this pair. I would have a 100 point stop, with a target of 0.8725 above. However, keep in mind that this market tends to move slowly, so patience will be needed.

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#British #Pound Rises after #Fed Meeting,#BoE Next (14 Dec 2023)

• Bank of England expected to pause
• Federal Reserve projects three rate cuts in 2024

The British pound continues to move higher on Thursday. In the European session, GBP/USD is trading at 1.2648, up 0.24%.

The US dollar took a tumble on Wednesday after the Federal Reserve gave the nod to rate cuts in 2024. This helped the pound recover after losing ground in the aftermath of a soft UK GDP report on Wednesday.

Bank of England expected to stand pat

The Federal Reserve created quite a buzz in the financial markets on Wednesday after the Fed signalled that it expected to trim rates in 2024. Will Bank of England Governor Andrew Bailey provide an encore at today’s meeting?

The BoE is widely expected to maintain the cash rate at 5.25% for a third straight time. There is little doubt that the BoE’s aggressive rate-tightening is over, with inflation falling and the UK economy limping along. The key question is whether Bailey will change his stance and signal that rate cuts are on the way, as Fed Chair Powell did at the Fed meeting.

Bailey has been hawkish, saying that rates will remain in restrictive territory for an extended period (“higher for longer”) and that there is more work needed to bring inflation back down to the Bank’s 2% target. Bailey has said that it’s premature to talk about rate cuts, but the markets aren’t buying it and have priced in five quarter-point rate cuts in 2024, up from three cuts just a few days ago. With a pause widely expected at today’s meeting, the rate statement and Bailey’s press conference could provide some drama and shake up the financial markets, if the BoE shifts from its hawkish stance and acknowledges that it plans to cut rates next year.

Powell’s Pivot sends US dollar lower

The Federal Reserve maintained the benchmark rate on Wednesday, as expected. What was somewhat surprising was the Fed Chair Powell’s sharp pivot, as he signalled that the Fed expected to trim rates three times in 2024. This forecast comes less than two weeks after Powell said it would be “premature” to speculate about the timing of rate cuts and that the door was still open to further hikes. The rate statement noted that inflation “has eased over the past year but remains elevated”, suggesting that inflation is moving in the right direction but the battle ain’t over yet.

GBP/USD Technical

• GBP/USD is putting pressure on resistance at 1.2669. Above, there is resistance at 1.2720
• There is support at 1.2585 and 1.2534

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#British #Pound Shrugs as #UK Economy Rebounds (12 OCT 2023)

• UK GDP bounces back with 0.2% gain
• FOMC minutes: Restrictive policy to continue until inflation falls to target

The British pound continues to have a quiet week. In the European session, GBP/USD is trading at 1.2302, down 0.08%.

UK’s GDP rises 0.2%

The UK economy grew by 0.2% in August, rebounding from a revised 0.6% decline in July. The gain of 0.2% matched market expectations and the British pound is showing little reaction.

The services sector has become the primary driver of growth for the UK economy. In August, services rose 0.4% m/m and partially offset declines in construction and manufacturing. Services declined in August by 0.6% m/m and GDP declined by the same figure. The three months through August painted a more positive picture, with GDP rising by 0.3%, up from 0.2% in the previous release and matching the market estimate. Construction, manufacturing and services all reported gains.

The Bank of England meets next on November 2nd, ahead of next week’s UK employment and inflation reports. These releases will be key factors in the BoE’s decision – if they point to the economy cooling, the BoE will have further support to hold rates for a second straight time. Conversely, strong data would put pressure on the BoE to increase rates.

The Federal Reserve released the minutes of the September meeting in Wednesday, in which the Fed held rates. The minutes showed some dissension within the FOMC, with a majority favouring a rate hike “at a future meeting”, with the minority saying that no further hikes were necessary. However, there was unanimity that rate policy should remain restrictive until it was clear that inflation was “moving down sustainably” towards the 2% target.

The question is whether the minutes have become dated, as things have changed a lot since September. US yields have climbed sharply, there is a war in the Middle East and the US economy is showing cracks. Fed members have been sounding more dovish, noting that higher yields have raised borrowing costs, which could put a break on growth and curb inflation with the Fed having to increase rates. The future markets have slashed their expectations for a rate hike before the end of the year. The odds in mid-September for a rate hike stood at 41% but have fallen to 26% currently, according to the CME FedWatch Tool.

GBP/USD Technical

• 1.2179 and 1.2097 are providing support
• GBP/USD tested resistance at 1.2321 earlier. Above, there is resistance at 1.2403

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#Pound Shrugs Off Soft Construction #PMI : #GBPUSD (5 OCT 2023)

• UK Construction PMI declines

The British pound has ticked higher on Thursday. In the North American session, GBP/USD is trading at 1.2149, up 0.09%.

UK Construction PMI declines

The UK Construction PMI fell to 45.0 in September, down significantly from 50.8 in August and below the consensus estimate of 49.9. This was the first decline in three months and the steepest decline since May 2020. The survey found that high mortgage rates and weak demand for house purchases had a negative impact on the construction industry. As well, business expectations fell to their lowest level this year.

The Construction PMI release is further evidence that the Bank of England’s sharp tightening cycle has cooled down the economy. This week’s Services and Manufacturing PMIs both pointed to contraction in September, with readings below the 50 level. The British pound didn’t react to the Construction PMI release, but the pound continues to fall toward the symbolic 1.20 line and the currency will likely face further headwinds if upcoming releases remain soft.

As inflation continues to ease, many major central banks are close to or at the end of their rate-tightening cycle. The Federal Reserve, Bank of England and the ECB were all late to the rate-hike party and don’t want to prematurely declare that rate hikes are over. Inflation remains well above target for all three central banks and stating that rate hikes remain on the table means that policy makers can raise rates if needed without losing credibility.

The BoE paused in September and another hike at the November meeting is a strong possibility, barring a nasty inflation surprise ahead of the meeting. The BoE, which still has its hands full with inflation, says that rate cuts remain a long way off, but that could change if economic growth continues to weaken and inflation falls sharply.

GBP/USD Technical

• GBP/USD tested support earlier at 1.2120. The next support level is 1.2035

• There is resistance at 1.2196 and 1.2256

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#USDJPY Technical Analysis: The US Holiday Weakens the Appetite of Investors: 4 July 2023

The USD/JPY currency pair also jumped after signs that the Japanese government will intervene if the Japanese currency continues to decline.

The Japanese yen continued to decline even after the Bank of Japan showed signs of tightening. According to trading, the USD/JPY exchange rate jumped to its highest level at 145.06, the highest level since November of last year, before settling around the level of 144.66 at the time of writing the analysis on the American holiday, which may weaken investor appetite and weaken liquidity, which ensures stability In narrow ranges for currency pair trading. That is up more than 13% this year 2023 even as the US Dollar Index (DXY) moves sideways.

Overall the Japanese economy is doing well. Its stock market has become one of the best-performing in the world. Its major indices such as the Topix and Nikkei 225 jumped to the highest level in more than three decades as foreign investors piled on. Additional data shows that the Japanese economy is recovering. The latest figures showed that Japanese retail sales jumped 5.7% in May after rising 5.15% in the previous month. This was the 15th consecutive month of growth in the retail sector with tourism booming. Retail sales increased by 1.3% on a monthly basis.

More data showed that household confidence in the country improved to 36.2 from 36 previously. This is an important figure because consumer spending is an important component of the Japanese economy. There are signs that the Bank of Japan will begin to tighten in the near term. In a soon-to-be-announced statement, New Bank of Japan Governor Kazuo Ueda said the bank could begin to normalize policy in the near term if it becomes confident that inflation will pick up in 2024. Inflation remains below 2% but is on the rise.

The USD/JPY currency pair also jumped after signs that the Japanese government will intervene if the Japanese currency continues to decline. For his part, the Finance Minister said in a statement that the government is closely monitoring the currency. In another statement, Masanda Kato, the country's currency diplomat, said the government would not rule out interventions. Last year, the government sold more than $65 billion in foreign reserves when the exchange rate of the US dollar to the Japanese yen jumped to the 150 resistance level. The weakness of the Japanese yen has hurt many Japanese companies that depend on imports.

USD/JPY Technical Outlook

• According to the performance on the daily chart below, the USD/JPY price is still in a strong bullish trend in the past few months.
• It started the year at 126 and has now risen to 145 resistance. Recently, the pair moved above the important resistance at 138, the high of March 7th.
• It has moved above the 50-day moving average.

Meanwhile, oscillators such as the RSI, Stochastic Oscillator, and MACD moved to the overbought level. Therefore, there is a possibility that the pair will re-test the support at 138.76 with high hopes for Japanese intervention in the forex markets to stop the further collapse of the Japanese yen. The dollar/yen currency pair may move in narrow ranges until the markets and investors react to the announcement of the contents of the minutes of the last meeting of the US Federal Reserve, and then the US job numbers.

Overall the Japanese economy is doing well. Its stock market has become one of the best-performing in the world. Its major indices such as the Topix and Nikkei 225 jumped to the highest level in more than three decades as foreign investors piled on. Additional data shows that the Japanese economy is recovering. The latest figures showed that Japanese retail sales jumped 5.7% in May after rising 5.15% in the previous month. This was the 15th consecutive month of growth in the retail sector with tourism booming. Retail sales increased by 1.3% on a monthly basis.

More data showed that household confidence in the country improved to 36.2 from 36 previously. This is an important figure because consumer spending is an important component of the Japanese economy. There are signs that the Bank of Japan will begin to tighten in the near term. In a soon-to-be-announced statement, New Bank of Japan Governor Kazuo Ueda said the bank could begin to normalize policy in the near term if it becomes confident that inflation will pick up in 2024. Inflation remains below 2% but is on the rise.

The USD/JPY currency pair also jumped after signs that the Japanese government will intervene if the Japanese currency continues to decline. For his part, the Finance Minister said in a statement that the government is closely monitoring the currency. In another statement, Masanda Kato, the country's currency diplomat, said the government would not rule out interventions. Last year, the government sold more than $65 billion in foreign reserves when the exchange rate of the US dollar to the Japanese yen jumped to the 150 resistance level. The weakness of the Japanese yen has hurt many Japanese companies that depend on imports.

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#GBPJPY Forecast: #Pound Turns Around and Looks Higher Against #Yen: 7 April 2023

This is a market that will continue to be noisy, so traders need to be flexible and keep their position size reasonable.

• The GBP/JPY experienced some dips in Thursday's trading session, but buyers soon entered the market, turning the situation around.
• The Bank of Japan has continued to see the need to keep interest rates down, printing yen and buying bonds whenever they begin to rise.
• Meanwhile, the British pound has been one of the better performers worldwide, indicating a potentially bullish market.

Traders Should Stay Flexible

Despite the potential challenges, there are still opportunities for traders in this market. Traders should stay up to date with the latest developments and remain flexible in their approach. It's also crucial to maintain reasonable position sizes and watch the key indicators, such as the EMAs, to help navigate the market's volatility.

TLDR; the British pound has seen some dips in Thursday's trading session, but the Bank of Japan's continued efforts to keep interest rates down and the pound's overall performance suggest a potentially bullish market. However, traders should keep a close eye on the challenging ¥165.50 level and watch for potential moves to the ¥169 or ¥160 levels. Ultimately, traders should stay flexible, keep their position sizes reasonable, and monitor key indicators to navigate the market's volatility.

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#British #Pound Technical Forecast: #GBPUSD Dives Towards Support : 18 FEB 2023

British Pound technical forecast: GBP/USD weekly trade levels

• British Pound holds December highs- reverses back into downtrend support
• GBP/USD threat remains for further losses medium-term
• Sterling resistance ~1.2156, 1.2448, 1.2773– support 1.1783-1.1841, 1.1632/44 (key),

The British Pound plunged more than 4.2% off the January highs with GBP/USD now approaching initial trend support near the yearly low. While an outside-weekly reversal suggests some downside exhaustion here, Sterling remains vulnerable to a deeper correction while below this week’s high. These are the updated targets and invalidation levels that matter on the GBP/USD weekly technical chart.

British Pound Price Chart – GBP/USD Weekly

Technical Outlook: The British Pound has been trading within the January range since the start of the month with a reversal off Fibonacci resistance at 1.2448 taking GBP/USD back into downtrend support.

The focus is on a possible reaction off a key technical confluence at 1.1783-1.1841– a region defined by the 100% extension of the recent decline and the objective 2023 opening-range low. Ultimately, a break / weekly close below the 2020 low-week close / 38.2% retracement at 1.1632/44 is needed to mark resumption of the broader downtrend.

Initial resistance stands with the 52-week moving average (currently ~1.2156) with a breach above the yearly highs exposing pitchfork resistance around the February 2019 low at ~1.2773– an area of interest for possible exhaustion / price inflection IF reached.

British Pound Price Chart – GBP/USD Weekly (2009 Price Parallel)

A parallel of the 2009 rally (pink) suggests a period of consolidation here into these support zones before a larger correction lower. For context, Sterling remained rangebound for nearly 230 days before breaking decisively – the current GBP/USD range is roughly 90-days in.

Bottom line: The British Pound remains vulnerable to further losses but is quickly approaching initial support levels near the January low. From at trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 1.1640. Rallies should be capped by this week’s high IF price is heading lower. I’ll publish an updated British Pound short-term outlook once we get further clarity on the near-term GBP/USD technical trade levels.

Key Economic Data Releases

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#Pound,#FTSE Unimpressed by Fiscal Statement:17 NOVEMBER 2022

The pound and the UK stock markets have shown no major reaction to the fiscal statement after Jeremy Hunt unveiled an austerity budget with £55 billion in tax hikes and spending cuts. If anything, both have fallen, along with other risk assets today. Tax hikes are going to chock any chances of economic growth that there might be, with the UK economy set to plunge into a recession amid soaring prices. As household incomes continue to get squeezed, spending falls, company revenue and profit are going to get a hit. Against this backdrop, it is very difficult to be optimistic on the UK stock markets or the pound.

The FTSE’s struggles to add to its gains from the previous week suggests investors are more worried about a deteriorating domestic, Eurozone and global economies, than are hopeful about the US and other central banks easing rate hikes.

It looks like worries over China is the main focus right now, where Covid cases are on the rise again and investors fear more lockdowns are likely.

In the UK, recent data shows that quarterly GDP fell by a less-than-forecast 0.2%, while construction output and industrial production both topped expectations, even if they hardly grew. But the monthly GDP disappointed with a bigger fall of 0.6% on month. But the outlook looks grim and that’s where the market is focusing, not on the past.

UK’s soaring inflation means the BoE is expected to keep hiking interest rates, which should intensify the squeeze on the consumer. Lack of growth in the Eurozone and elsewhere are also not good news for UK’s multi-national corporations.

FTSE needs to stay below 200 MA for bears to pounce

The FTSE having turned lower on the week is now broken back below the broken 200-day average and was testing support around 7290-7310 at the time of writing. A daily close below these levels would make things look bearish again. For extra confirmation, the bears might be looking for move below recent lows at 7248. If we break that level, then things will look bearish again and the technical outlook will then match a darkening economic outlook.

GBP/USD breaks trend line after hitting a ceiling at 1.20

With the short-term trend line broken on the hourly chart, it looks like the path of least resistance is now back to the downside for the cable. So, watch out below!

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Sunset Market Commentary: #Pound Soars as US Dollar Retreats#AUD Soars as China’s Inflation Drops (9 SEPTEMBER 2022)

Pound Soars as US Dollar Retreats

GBP/USD has recorded sharp gains today. In the European session, GBP/USD is trading at 1.1608, up 0.92% on the day. Still, the pound remains vulnerable – on Wednesday, it fell to 1.1407, its lowest level since 1985. Looking ahead to next week, there is a data dump on Monday, with GDP and Manufacturing Production the key events.

It’s a very light calendar today, with no UK data and only one minor US event. Even so, the British pound has jumped on the bandwagon as the US dollar is broadly lower. The US dollar has taken a break after some impressive gains, as the pound has fallen some 500 points in just three weeks. With the US economy in good shape while the UK struggles, GBP/USD could resume its downtrend shortly.

In the UK, PMIs have been pointing to weak conditions across the economy. The August manufacturing and construction PMIs pointed to contraction, with readings below the neutral 50.0 line. The Services PMI managed to remain in expansion territory, but just barely, at 50.9. Inflation remains red hot, hitting 10.1% in July, which has caused a severe cost-of-living crisis.

Incoming Prime Minister Truss has pledged to cap energy bills, at a cost of some 132 billion pounds, which will provide households with some badly-needed relief. Truss inherits a struggling economy and her initial policy moves will be closely watched. Deutsche Bank has warned that an “unfunded and untargeted fiscal expansion” by the new government could raise inflation expectations and lead to a “sterling crisis”.

What’s next for the Federal Reserve? The next meeting is on September 21st, with the Fed looking to raise rates by either 50 or 75 basis points. Next week’s inflation report could be a major factor in the Fed’s decision. Fed Chair Powell and other members have stated that curbing inflation is “priority number one”, and if inflation falls, it will raise speculation that the Fed plans to ease up, which would weigh on the US dollar. In July, inflation unexpectedly fell, and market exuberance about a change in Fed policy sent the US dollar sharply lower, despite the Fed saying its stance had not changed.

GBP/USD Technical

• 1.1589 has switched to support. Below, there is support at 1.1417
• There is resistance at 1.1682 and 1.1839

AUD Soars as China’s Inflation Drops

The Australian dollar has posted sharp gains today. In the European session, AUD/USD is trading at 0.6837, up 1.27%.

China inflation falls unexpectedly

China’s economy has been stalling, as global demand has weakened and China rigorously enforces a zero-Covid policy. The slowdown in the Chinese economy has hurt global growth, but the silver lining is that August inflation also dropped, which has taken the edge off global inflation. China is a key driver of external inflation pressures, and the decline will be welcome news in the major economies, where inflation remains enemy number one and has led to a sharp tightening in policy.

China released the August inflation earlier today. On an annualized basis, August CPI was up 2.5%, lower than the 2.7% gain in July and below the consensus of 2.8%. The Producer Price Index for August slowed to 2.3%, down from 4.2% and below the estimate of 3.1%. The drop in CPI in the world’s number two economy has raised risk sentiment and sent risk-related currencies like the Aussie sharply higher today.

The RBA raised rates by 0.50% earlier this week, bringing the cash rate to 2.35%. RBA Governor Lowe said on Thursday that the RBA would need to raise interest rates at least twice more to contain the “scourge” of inflation. Lowe reiterated that the pace and extent of future rate hikes would be data-dependent, especially inflation and wage growth. After four straight hikes of 0.50%, the RBA may decide to ease up in October with a small hike of 0.25%. Next week’s employment report will be an important factor in the RBA’s rate decision.

AUD/USD Technical

• AUD/USD is testing support at 0.6737. Below, there is support at 0.6661
• There is resistance at 0.6737 and 0.6846

 

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#Pound Stable But Markets Uneasy (10 MAY 2022)

The British pound is in calm waters early in the week, as GBP/USD trades slightly above the 1.23 line. There are no major releases out of the UK or the US, which means that the pound should enjoy a quiet day.

Can the BoE get it right?

The British pound plunged over 2% last Thursday, a most difficult feat, considering that the Bank of England actually raised interest rates at its meeting that day. What went so wrong for the pound?

The BoE dutifully raised rates at the meeting, but investors lasered in on the central bank’s downbeat message which warned of a recession, while at the same time forecasting that inflation will top 10% this year. The UK is experiencing soaring inflation at growth remains weak, which are the ingredients for stagflation. The Bank slashed its growth forecast from 1.25% to -0.25%, and the spectre of negative growth may have shaken up investors and sent the pound on its laurels. The rate hike, which in any event was relatively small at 0.25%, failed to impress the markets.

BoE Governor Bailey was brutally honest when he said after the meeting that “It is a very weak projection, a very sharp slowdown”. I always appreciate when central bankers don’t hide behind gobbledygook, but the markets tend to reward good news, not honest news. There appears to be a heavy dose of scepticism as to whether the BoE can get it right, as it navigates between raising rates in order to curb inflation, while at the same time not choking economic growth. BoE Governor Bailey will need to show some achievements, such as lower inflation, in order to re-establish the central bank’s credibility, which has taken a blow in recent months.

The pound has stabilized for the time being but remains vulnerable. There is plenty of risk aversion in the air, with spiralling inflation, a slowdown in China and the Ukraine war. With the Federal Reserve in hawkish mode and the US economy performing well, the risk towards GBP/USD is tilted to the downside.

GBP/USD Technical

• There is support at 1.2199 and 1.2056
• GBP/USD faces resistance at 1.2418 and 1.2561

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#Pound Takes a Tumble after #BoE Hike: 04 MAY 2022

The British pound is fading badly on Thursday. GBP/USD has dropped a staggering 2.15% today and has fallen below the 1.24 line for the first time since July 2020. After the BoE decision, market focus has shifted to the elections in Northern Ireland later today. A Sinn Fein victory could weigh on the wobbly pound.

BoE hike fails to impress markets

The BoE raised interest rates for a fourth straight time since December, bringing the Official Bank Rate to 1.00%, its highest since 2009. Yet the market reception to the BoE move was decidedly chilly, as the pound has plunged almost 2% today.

Why the sour reaction from the markets? The 0.25% was a modest move and it’s questionable if it will have much impact on soaring inflation. In March, CPI rose to 7.0%, up from 6.2%, and the BoE has warned that inflation could surpass 10%. The modest rate hike passed by a vote of 6-3, surprising the markets which had expected an 8-1 vote. Two MPC members called for a 0.50% hike, which reveals a sharp split within the MPC. Governor Bailey admitted after the meeting that an uncertain economic outlook had led to a range of views in the MPC, and such a statement can hardly be expected to instill confidence amongst investors.

The BoE cannot be blamed for not being aggressive – it is well into its rate-hike cycle and the policy summary noted that “some degree of further tightening in monetary policy may still be appropriate in the coming months”. In addition, the BoE dropped the word “modest” to describe upcoming rate hikes. Yet the markets appeared to focus on the split vote and the warning from the BoE that the country could face a sharp economic downturn, and the thumbs-down response has sent the pound sharply lower.

As expected, the Federal Reserve raised rates at its meeting by a half-point, the largest increase in 20 years. The Fed signalled that it will deliver additional half-point hikes in June and July, with Fed Chair Powell stating that the FOMC was not “actively considering” a 0.75% increase.

The Fed is also implementing quantitative tightening with a reduction in the balance sheet. Starting in June, the Fed will sell USD 45 billion/mth in assets, which will rise to USD 95 billion/mth in September. In sharp contrast to the BoE’s hike, the financial markets reacted positively, as investors believe that the Fed’s rate hikes can curb inflation while ensuring a soft landing for the economy and avoiding a recession.

GBP/USD Technical

• GBP/USD faces resistance at 1.2612 and 1.2719
• There is support at 1.2272 and 1.2179

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