British Pound Forecasts: Nomura are Fans of GBP - Friday 15/11 Live Coverage
The British pound (GBP) is looking to end what has been a good week on a high. We saw strong gains on Thursday afternoon against most of the majors and these have held overnight. Today we will continue our efforts to deliver the latest forecasts and opinions on the UK currency amidst a light data calendar.
Rates as of last update:
- The pound euro exchange rate is 0.08% higher at 1.1949.
- The pound dollar exchange rate is 0.2% higher at 1.6099.
- The pound New Zealand dollar rate is 0.37% lower at 1.9351.
- The pound Aus dollar exchange rate is 0.36% lower at 1.7187.
Please keep in mind all quotations here are inter-bank spot rates. Your retail rate will be delivered with a spread being subtracted by your bank at their discretion. This is a competitive market though and the good news is that an independent FX provider will seek to beat your bank's rate, thus delivering up to 5% more FX. Please learn more here.
16:10: A quite week ahead, but momentum should be supportive for sterling
We have seen the month's major data events pass, next week is looking empty and this opens the door to technical considerations which become more important for traders. Therefore, the positive momentum sterling has enjoyed at the end of this week could see the UK currency tick higher.
Be aware of the release of the minutes from this month's Bank of England MPC meeting on Wednesday. However, markets are not expecting any surprises in the wake of this week's bullish inflation report.
16:01: GBP/NOK, GBO/JPY also looking good
"GBP/NOK is another attractive technical configuration, as it has just broken its resistance at 9.8248 (01/07/2010 high), breaking out of a multi-year base formation. The implied target at 11.1478 calls for a test of the key resistance at 10.7730 (23/06/2009) at the minimum. The British pound should also appreciate against the Japanese yen, as the Bank of Japan is conducting a massive quantitative easing and is nowhere near withdrawing its stimulus. However, the key resistance at 163.09 (07/08/2009 high) and the elevated short JPY positions make us cautious in the short-term."
15:44: Time to hammer the GBP/CAD?
Last night we gave this view on GBP/CAD from Greg Moore at TD Securities:
"GBP/CAD remains technically very well supported. The short-term trend lost a little momentum over the past week but we continue to highlight an unusually strong constellation of bullishly-aligned momentum signals from the longer-term studies that make for compelling evidence that the move up in the cross has further—perhaps a lot further—to run in the course of the next few months. Near-term, we are looking for a push to 1.70/1.72. New cycle highs would be supportive of more GBP/CAD strength."
Today, Dieter Merz, at MIG Bank says:
"Looking at the charts, we favour long Sterling positions especially against commodity currencies. GBP/CAD, one of our old favourites, continues to offer attractive short-term and longer-term upside potential: the multi-year consolidation between 1.5249 and 1.6474 implies a minimum target at 1.7700."
15:37: Why is the Aussie and Kiwi doing so well against GBP right now?
Kathy Lien at BK Asset Management says the reason for this out-performance lies in China:
"Investors are optimistic about the outlook for China after the government released its reform plan details.
"While the most talked about announcements are relaxation of the one child policy and end to labour camps, China also gave farmers greater rights, promised to proactively develop mixed ownership, allow employees to hold shares in those companies, allow non-state investment into state projects, set up free trade zones, exempt most corporate projects from government approvals and transfer 30% of profits produced by state owned enterprises to public finances to improve the well being of their citizens.
"The goal is to make China's growth more sustainable and based on the reaction in equities and currencies investors believe that encouraging private investment will help stabilize China's economy."
15:32: GBP/USD readying for a crack at 1.62?
The pound dollar rate has moved steadily higher through today's session, confounding those who were scared to back GBP/USD higher.
Valeria Bednarik, chief analyst at FXstreet.com noted that "a daily close above 1.6100 should point for a test of 1.6260 late October highs for next week".
14:26: Wait for the breakout before risking cash on GBP-USD
Matt Weller at GFT is maintaining a cautious approach to GBP-USD:
"The GBP/USD broke above the critical 1.6052 level, opening the door for the rally up to 1.6100 as anticipated. Now, rates appear to be trapped between these two levels. As far as trading opportunities go, we would prefer to wait for a confirmed break out of the 1.6050-1.6100 range before putting capital at risk."
13:04: Pound could start descending
"Pound completed this ascending wave. We think, today price may start correction towards 1.5975 and then form another ascending wave to break maximums. This whole movement may be considered as head & shoulders reversal pattern." - Roboforex.
12:44: Nomura are fans of the GBP
"Sell JPY, CAD, SEK & CHF, Buy GBP."
"We recently took profit on our long GBP/SEK and entered a 3M EUR/GBP 0.83/0.81 put spread. We are long GBP via CHF and short JPY via USD, EUR, and GBP. We are also long EUR/CHF. We also remain short CAD via a basket."
Indeed, the bank are the most aggressive GBP/USD bulls we have encountered yet. Read about their forecast on the pair here.
11:13: More key levels for euro / pound
Analyst Luc Luyet at MIG Bank believes the recent relief rally in the euro sterling could finally have run its course:
"EUR/GBP has likely ended its short-term bounce. A test of the recent low at 0.8301 is favoured. An hourly resistance can be found at 0.8416 (14/11/2013 high). Another resistance stands at 0.8477 (04/11/2013 high).
"The medium-term declining channel, in place since the February 2013 top, calls for a mild bearish bias. We favour further declines below the support at 0.8333. Other supports can be found at 0.8225 (28/12/2012 high) and 0.8082 (01/01/2013 low)."
11:09: Will GBP break into new territory vs the euro?
We are seeing more gains for the pound against the euro today, more to come?
From whatever angle you approach this question it is hard to deny the euro finds formidable support at 0.8333 (the all-important round 1.2 point for GBP/EUR).
ICN Financial reckon a stab lower is on the cards:
"The price extended the downside move below our first target at 0.8375, where the downside pressure continues to be dominant. We maintain our bearish scenario, as price currently settles below 0.8375 broken support, looking for a retest of the previous major low at 0.8300." (Click to enlarge).
09:50: "We however remain somewhat suspect towards excessive upside"
"Despite broad based dollar resilience and disappointing Oct UK retail sales numbers, the GBP continued to ride on the positive vibes following Wednesday’s BOE Inflation Report.
"We however remain somewhat suspect towards excessive upside in the current dollar environment and the pair may remain range bound in the interim. Going ahead, the 1.6150 level may present a near term ceiling while the 1.6000 floor and the 55-day MA (1.5994) may cordon off the pair on the downside."
08:46: GBP unlikely to break higher
Lloyds Bank Research see GBP being rangebound against the EUR and USD for the time being:
"It seems unlikely at the moment that there will be sufficient news to trigger a break of the last month’s ranges in GBP/USD or EUR/GBP.
"1.5850-1.6260 is the big range in GBP/USD, and we see greater potential for a break of the upside, but the narrower 1.5950-1.6120/50 range seems likely to hold today. In EUR/GBP, the 0.8330 area remains the major support, but in the absence of further news seems unlikely to be tested today."
08:31: Analysts still unsure how to trade GBP-USD
The inability of the British pound (GBP) to conclusively break above 1.6 has analysts coy on calling GBP-USD at this stage.
ICN Financial are part of this camp:
"The pair is trading around 13% correction at 1.6070 which represents an intraday interval as showing on graph. Meanwhile, the pair is trading outside the ascending channel and above 23.6% correction in which the pair failed to stabilize below it.
"We prefer to be neutral in this report waiting for new confirmation signals that makes Risk/Reward ratio appropriate, whereas we need to confirm if the bullish move of the past two days is to retest the broken channel or a new bullish wave."
08:16: Yellen dominates FX focus, USD turns softer
Ahead for the US Dollar today we see Empire manufacturing index and industrial production data will drive the USD.
The concern in the US is more about potential shutdown related weakness in consumer demand and services than in manufacturing, so there shouldn’t be any major impact from today’s data.
"For now, we would not expect the USD to break significantly lower, and 80.50 should be effective short term support for the USD index, despite the softer USD tone post-Yellen," say Lloyds Bank.