Sterling Live on Mon 7th Oct: GBP in Recovery Mode, What to Look Out for in the Week Ahead

The British pound sterling (Currency:GBP) has put in a decent recovery on Monday morning after the declines witnessed at the close of last week. This will be a busy week for those with an eye on GBP with the Bank of England and some hard data on offer.

Latest pound rates:

• The pound sterling to euro exchange rate is 0.3 pct up on Friday's close at 1.1845.
• The pound sterling to US dollar rate is 0.43 pct higher at 1.6078.
• The pound to Australian dollar is 0.68 pct higher at 1.7083.
• The pound to New Zealand dollar is 0.8 pct higher at 1.9408.

Note that your bank will affix a discretionary spread to the above market rates; an independent FX provider will however guarantee to undercut your bank's offer, thus delivering you more currency and more flexibility. Find out more here.

16:40: Another slow day for sterling predicted

There are no major currency-shaking data releases due tomorrow.

Expect more technical considerations to come to the fore.

The data releases due are second-tier in nature:

At midnight the BRC Retail Sales Monitor is released for September.

Also due for release at this time is the RICS Housing Balance September reading.

14:26: Swissquote Bank remain buyers of Sterling on dips

Ipek Ozkardeskaya remains bullish on the UK currency:

"GBPUSD pullback was greater than we had anticipated breaking 1.6168 support on its way to a 1.6007 low. Despite the serious setback, we see the price action as a healthy unwind of overextend conditions.

"With GBPUSD comfortably in an expanded uptrend channel and momentum indicators in bullish territory we remain bullish. Further downside should be limited so we would remain a buyer on dips."

12:41: GBP long positions unwind, sterling weakness unlikely to persist today

Sasha Nugent at Caxton FX gives her forecast for GBP vs EUR today:

"Last session we witnessed the unwinding of sterling long positions, which saw the GBP/EUR rate plummet below 1.19 and struggle to remain above 1.1850.

"It is unlikely that sterling weakness will continue today and we do not expect major movements in this pair as all focus remains on the US government."

11:47: Sitting on the fence over GBP/USD

Would you sell the dollar from here? Or would you be like us and rather wait for confirmation as to whether last week's GBP declines were a false signal. We consider the divergent views on GBP/USD here.

09:55: GBP strength predicted to resume this week

Lloyds Bank Research have today told clients that they expect GBP strength to resume this week:

"GBP gains last week helped by safe-haven demand were pared back on Friday following the failure to break through the 1.6250/60 area. However, with no resolution from the US over the weekend, we expect USD weakness against GBP to resume.

"There is little case for GBP to weaken, especially following the strong PMIs last week.  We expect moves in GBP/USD will likely remain driven by developments from the US, with good initial support around the 1.60 level."
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Are you questioning the ability of sterling to eke out further gains? If you are looking to lock-in these strong exchange rates you should consider asking an independent FX provider about a forward contract to protect against potential GBP declines. More about independent FX providers here.

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08:34: Why did sterling fall last week?

ANZ Research confirm to us that last week's declines in GBP were hard to fathom with hard economic data seemingly being ignored:

"GBP suffered from a rumoured large sell flow, which if true, could see some reversion this week as liquidity returns."

08:32: Can key support hold for GBP/USD?

Key support levels for GBP/USD appear to have held for now. FX Market Alerts tell us:

"Sharp decline seen last two sessions, enforced by the negative cross-over seen on daily MACD is keeping pressure on the downside and eyeing the strong support at 1.5956 and this should keep this currency pair on a subdued tone during intraday trading."

08:28: What to look out for in the week ahead

Chris Walker at Barclays says we should see currency markets focus on hard data once more:

"We expect no change in policy from the BoE in the October meeting, and will therefore need to wait until the minutes are released later in the month to get any further insights into their policy stance.

"GBP underperformed in the past week – the monthly PMI indicators were moderately below consensus estimates but nonetheless point towards a strong growth outlook in Q3.

"Focus will shift to hard data this week, with industrial and manufacturing production data due on Wednesday – the surge in the PMI suggests a strong MP and IP print. We expect softer numbers of 0.2% m/m for MP (cf 0.4%) and 0.1% for IP (cf 0.4%), however."