British Pound (GBP) LIVE: Sterling Volatile as UK GDP Reported at 0.7 pct for last quarter + Today's Exchange Rate Forecasts and Professional Views
By Gary Howes 
Up to date British pound (GBP) exchange rates
Up to date British pound (GBP) exchange ratesPound sterling to euro exchange rate: 0.22 pct higher at 1.2156. Pound sterling to US dollar exchange rate: 0.14 pct higher at 1.6610. Pound sterling to Australian dollar exchange rate: 0.5 pct lower at 1.8890. Pound sterling to Canadian dollar rate: 0.09 pct lower at 1.8422. Pound sterling to New Zealand dollar exchange rate: 0.5 pct lower at 2.0049.
BE AWARE: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.15:47: Turkey in focus, set to impact on EUR
"Over the next 24 hours, we are looking forward to announcements from 3 central banks. The first will be the Central Bank of the Republic of Turkey (CBRT) who is widely expected to raise interest rates by a few hundred basis points. They are holding an emergency monetary policy meeting today and their announcement is expected at 5pm ET or 10pm London. The goal of the CBRT is to restore confidence and demand for their currency and the expectation for a strong rally in the Turkish Lira against the EUR is the main reason why is the euro is lagging behind other major currencies this morning." - Kathy Lien at BK Asset Management.15:00: Outlook for EUR/GBP remains negative
Analyst Luc Luyet at MIG Bank on the outlook for the euro pound rate:
"EUR/GBP declined significantly yesterday near the resistance implied by the steeper declining trendline. Hourly supports stand at 0.8210 (24/01/2014 low) and 0.8168. A resistance lies now at 0.8306.
"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160.
Another key support can be found at 0.8082 (01/01/2013 low)."14:50: Significant GBP/EUR gains later this year?
More from Scotiabank, this time on the outlook for the Euro:
"EUR is weak, down 0.2% since yesterday’s close and flirting with a break below its 50‐day MA of 1.3648. We are EUR bears, not believing that it will remain a strong currency backed by weak fundamentals.
"We found weekend comments by President Draghi, that the ECB would consider buying private sector loans a clear sign that central bank policy in Europe will prove more accommodative for longer than either the BoE or the Fed. This is likely to prove a significant weight against EUR in the second half of this year.
"Today, fundamental data releases were not the focus, with the core release a softer than expected German import prices, flat m/m and –2.3% y/y."14:31: All signals are bullish on GBP-USD
"GBPUSD short‐term technicals: bullish - all studies are in buy territory, suggesting upside pressure is building again. For short‐term trading we are biased to be long GBP/USD." - Camilla Sutton at Scotiabank.12:49: Bank of England will want to see more before raising rates
Barclays have confirmed they predict the Bank of England MPC will raise interest rates in the second quarter of 2015, regardless of unemployment:
"We think the performance of the economy in levels matters significantly to the MPC and for this reason a few consecutive quarters of strong growth are unlikely to lead to an imminent Bank Rate increase despite the recent sharp fall of the unemployment rate to 7.1% (close to the 7.0% threshold of the forward guidance framework).
"We forecast the MPC to start hiking in Q2 15 given the strong turnaround in the economy and labour market, although we think that a hike as soon as 2014 would be premature in the current environment of subdued inflation pressures and would risk choking off the recovery."11:34: Don't play sterling against the USD
UBS analyst Gareth Berry says today's strong GDP reading will present a headache for the Bank of England Governor Carney. He also has a word of caution for those trading GBP/USD:
"A strong GDP report would raise fresh doubts about how long the BoE could hope to keep the policy rate at 50bp, whatever assurances are likely to emerge from the inflation report. It would also create an interesting backdrop for Governor Carney’s speech scheduled for Wednesday. Lastly, we would have to imagine a sterling-positive outcome to such a turn of events, but would rather play it on the crosses rather than against the dollar given the FOMC is likely to announce another round of tapering on Wednesday."11:17: Take advantage of strong rates while you can
Will the Bank of England spoil the fun? Remember Carney said, "The appreciation of sterling will hold back the expansion of net exports."
Sasha Nugent at Caxton FX reckons the Bank will be come increasingly vocal on the matter and will attempt to talk sterling lower:
"Reasons behind a strong pound seem to be coming in full flow, and the strong UK GDP reading adds to the list of positive UK data supporting the pound. The strength of sterling has come under scrutiny recently by the BoE, and it may not be long before the central bank’s message is received and the pound gives up some of its recent gains. Given the momentum behind the pound, it is unlikely the single currency will be able to do curb losses and so the only way is up for GBP/EUR today."10:31: Good sterling gains
"The UK is back in the limelight and the UK GDP figure released this morning showed the UK grew at its fastest rate since 2007. The pound still has a lot of support and this reading has encouraged greater demand for sterling driving both the GBP/USD and GBP/EUR rates higher. A busy US calendar may limit sterling gains, but the euro remains vulnerable for yet another session." - Sasha Nugent at Caxton FX.09:47: Rising steadily
"The British pound (GBP) is rising steadily against the US dollar (USD). The cable looks at testing resistance at 1.6662 as the UK economy pivots to better performance and the Governor of the Bank of England has been proved true in tackling unemployment." - Orestis Aristides at Easy Forex.09:38: Sterling recovers
Bit of volatility being seen in GBP following the GDP release. Now back to levels seen before the release.09:35: Sterling sold-off in wake of on-target figures
We forecasted this would happen if UK GDP numbers met expectations.
Traders wanted to see an outperformance today if they were to take the British pound sterling higher, this did not happen and we are seeing selling. We doubt any sell-off will be deep.09:30: UK GDP @0.7 pct - on target
UK GDP at 0.7% for the last quarter. Expectations were for 0.7% but as mentioned below markets were actually positioned for 0.8%. Could be taken as being a disappointment.08:43: Best to stay clear of the British pound sterling?
UniCredit Bank echo a view we have seen quite a bit of - sit on the sidelines regarding the major pound exchange rate crosses.
Our expectations of a solid UK GDP may again help cable at the 1.6580 area. Yet, we would prefer not to get involved at these levels as there is too much optimism in sterling so that potential disappointment in the data may spark a vicious sell off. Mixed signals by BoE Carney may also induce markets to question the BoE’s credibility.08:40: Forecasting a descending correction ahead for pound dollar exchange rate?
Exchange rate market analysts RoboForex have completed a their latest forecast for the pound dollar exchange rate (GBP/USD):
"Pound is still forming the fifth ascending structure towards level of 1.6680. Later, in our opinion, market may form descending correction to reach level of 1.6475 (at least) or even 1.6255"Big expectations on economic growth
Downside risks to the British pound (GBP) have risen courtesy of heightened expectations regarding today's economic growth data release.
Signs are that markets appear to be forecasting an outcome that sits above consensus.
Lloyds Bank say:
"Our economists forecast GDP growth to have risen by 0.8% q/q, marginally higher than consensus forecasts of 0.7%. Although our economists do highlight some downside risks to their forecasts owing to the surprisingly softer manufacturing and constriction data in November and subdued services output in October.
"Looking at the breakdown on the Bloomberg survey, more economists are forecasting 0.8%, even though 0.7% is the median forecast. Either a 0.7-0.8% print should further support the underlying positive sentiment towards GBP. But given the move in GBP overnight we think a stronger print maybe now priced in so a 0.7% print could trigger a knee jerk move lower in GBP."
BE AWARE: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.
15:47: Turkey in focus, set to impact on EUR
"Over the next 24 hours, we are looking forward to announcements from 3 central banks. The first will be the Central Bank of the Republic of Turkey (CBRT) who is widely expected to raise interest rates by a few hundred basis points. They are holding an emergency monetary policy meeting today and their announcement is expected at 5pm ET or 10pm London. The goal of the CBRT is to restore confidence and demand for their currency and the expectation for a strong rally in the Turkish Lira against the EUR is the main reason why is the euro is lagging behind other major currencies this morning." - Kathy Lien at BK Asset Management.
15:00: Outlook for EUR/GBP remains negative
Analyst Luc Luyet at MIG Bank on the outlook for the euro pound rate:
"EUR/GBP declined significantly yesterday near the resistance implied by the steeper declining trendline. Hourly supports stand at 0.8210 (24/01/2014 low) and 0.8168. A resistance lies now at 0.8306.
"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160. Another key support can be found at 0.8082 (01/01/2013 low)."
"EUR/GBP declined significantly yesterday near the resistance implied by the steeper declining trendline. Hourly supports stand at 0.8210 (24/01/2014 low) and 0.8168. A resistance lies now at 0.8306.
"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160. Another key support can be found at 0.8082 (01/01/2013 low)."
14:50: Significant GBP/EUR gains later this year?
More from Scotiabank, this time on the outlook for the Euro:
"EUR is weak, down 0.2% since yesterday’s close and flirting with a break below its 50‐day MA of 1.3648. We are EUR bears, not believing that it will remain a strong currency backed by weak fundamentals.
"We found weekend comments by President Draghi, that the ECB would consider buying private sector loans a clear sign that central bank policy in Europe will prove more accommodative for longer than either the BoE or the Fed. This is likely to prove a significant weight against EUR in the second half of this year.
"Today, fundamental data releases were not the focus, with the core release a softer than expected German import prices, flat m/m and –2.3% y/y."
"EUR is weak, down 0.2% since yesterday’s close and flirting with a break below its 50‐day MA of 1.3648. We are EUR bears, not believing that it will remain a strong currency backed by weak fundamentals.
"We found weekend comments by President Draghi, that the ECB would consider buying private sector loans a clear sign that central bank policy in Europe will prove more accommodative for longer than either the BoE or the Fed. This is likely to prove a significant weight against EUR in the second half of this year.
"Today, fundamental data releases were not the focus, with the core release a softer than expected German import prices, flat m/m and –2.3% y/y."
14:31: All signals are bullish on GBP-USD
"GBPUSD short‐term technicals: bullish - all studies are in buy territory, suggesting upside pressure is building again. For short‐term trading we are biased to be long GBP/USD." - Camilla Sutton at Scotiabank.
12:49: Bank of England will want to see more before raising rates
Barclays have confirmed they predict the Bank of England MPC will raise interest rates in the second quarter of 2015, regardless of unemployment:
"We think the performance of the economy in levels matters significantly to the MPC and for this reason a few consecutive quarters of strong growth are unlikely to lead to an imminent Bank Rate increase despite the recent sharp fall of the unemployment rate to 7.1% (close to the 7.0% threshold of the forward guidance framework).
"We forecast the MPC to start hiking in Q2 15 given the strong turnaround in the economy and labour market, although we think that a hike as soon as 2014 would be premature in the current environment of subdued inflation pressures and would risk choking off the recovery."
"We think the performance of the economy in levels matters significantly to the MPC and for this reason a few consecutive quarters of strong growth are unlikely to lead to an imminent Bank Rate increase despite the recent sharp fall of the unemployment rate to 7.1% (close to the 7.0% threshold of the forward guidance framework).
"We forecast the MPC to start hiking in Q2 15 given the strong turnaround in the economy and labour market, although we think that a hike as soon as 2014 would be premature in the current environment of subdued inflation pressures and would risk choking off the recovery."
11:34: Don't play sterling against the USD
UBS analyst Gareth Berry says today's strong GDP reading will present a headache for the Bank of England Governor Carney. He also has a word of caution for those trading GBP/USD:
"A strong GDP report would raise fresh doubts about how long the BoE could hope to keep the policy rate at 50bp, whatever assurances are likely to emerge from the inflation report. It would also create an interesting backdrop for Governor Carney’s speech scheduled for Wednesday. Lastly, we would have to imagine a sterling-positive outcome to such a turn of events, but would rather play it on the crosses rather than against the dollar given the FOMC is likely to announce another round of tapering on Wednesday."
"A strong GDP report would raise fresh doubts about how long the BoE could hope to keep the policy rate at 50bp, whatever assurances are likely to emerge from the inflation report. It would also create an interesting backdrop for Governor Carney’s speech scheduled for Wednesday. Lastly, we would have to imagine a sterling-positive outcome to such a turn of events, but would rather play it on the crosses rather than against the dollar given the FOMC is likely to announce another round of tapering on Wednesday."
11:17: Take advantage of strong rates while you can
Will the Bank of England spoil the fun? Remember Carney said, "The appreciation of sterling will hold back the expansion of net exports."
Sasha Nugent at Caxton FX reckons the Bank will be come increasingly vocal on the matter and will attempt to talk sterling lower:
"Reasons behind a strong pound seem to be coming in full flow, and the strong UK GDP reading adds to the list of positive UK data supporting the pound. The strength of sterling has come under scrutiny recently by the BoE, and it may not be long before the central bank’s message is received and the pound gives up some of its recent gains. Given the momentum behind the pound, it is unlikely the single currency will be able to do curb losses and so the only way is up for GBP/EUR today."
Sasha Nugent at Caxton FX reckons the Bank will be come increasingly vocal on the matter and will attempt to talk sterling lower:
"Reasons behind a strong pound seem to be coming in full flow, and the strong UK GDP reading adds to the list of positive UK data supporting the pound. The strength of sterling has come under scrutiny recently by the BoE, and it may not be long before the central bank’s message is received and the pound gives up some of its recent gains. Given the momentum behind the pound, it is unlikely the single currency will be able to do curb losses and so the only way is up for GBP/EUR today."
10:31: Good sterling gains
"The UK is back in the limelight and the UK GDP figure released this morning showed the UK grew at its fastest rate since 2007. The pound still has a lot of support and this reading has encouraged greater demand for sterling driving both the GBP/USD and GBP/EUR rates higher. A busy US calendar may limit sterling gains, but the euro remains vulnerable for yet another session." - Sasha Nugent at Caxton FX.
09:47: Rising steadily
"The British pound (GBP) is rising steadily against the US dollar (USD). The cable looks at testing resistance at 1.6662 as the UK economy pivots to better performance and the Governor of the Bank of England has been proved true in tackling unemployment." - Orestis Aristides at Easy Forex.
09:38: Sterling recovers
Bit of volatility being seen in GBP following the GDP release. Now back to levels seen before the release.
09:35: Sterling sold-off in wake of on-target figures
We forecasted this would happen if UK GDP numbers met expectations.
Traders wanted to see an outperformance today if they were to take the British pound sterling higher, this did not happen and we are seeing selling. We doubt any sell-off will be deep.
09:30: UK GDP @0.7 pct - on target
UK GDP at 0.7% for the last quarter. Expectations were for 0.7% but as mentioned below markets were actually positioned for 0.8%. Could be taken as being a disappointment.
08:43: Best to stay clear of the British pound sterling?
UniCredit Bank echo a view we have seen quite a bit of - sit on the sidelines regarding the major pound exchange rate crosses.
Our expectations of a solid UK GDP may again help cable at the 1.6580 area. Yet, we would prefer not to get involved at these levels as there is too much optimism in sterling so that potential disappointment in the data may spark a vicious sell off. Mixed signals by BoE Carney may also induce markets to question the BoE’s credibility.
Our expectations of a solid UK GDP may again help cable at the 1.6580 area. Yet, we would prefer not to get involved at these levels as there is too much optimism in sterling so that potential disappointment in the data may spark a vicious sell off. Mixed signals by BoE Carney may also induce markets to question the BoE’s credibility.
08:40: Forecasting a descending correction ahead for pound dollar exchange rate?
Exchange rate market analysts RoboForex have completed a their latest forecast for the pound dollar exchange rate (GBP/USD): "Pound is still forming the fifth ascending structure towards level of 1.6680. Later, in our opinion, market may form descending correction to reach level of 1.6475 (at least) or even 1.6255"
Big expectations on economic growth
Downside risks to the British pound (GBP) have risen courtesy of heightened expectations regarding today's economic growth data release.
Signs are that markets appear to be forecasting an outcome that sits above consensus.
Lloyds Bank say:
"Our economists forecast GDP growth to have risen by 0.8% q/q, marginally higher than consensus forecasts of 0.7%. Although our economists do highlight some downside risks to their forecasts owing to the surprisingly softer manufacturing and constriction data in November and subdued services output in October.
"Looking at the breakdown on the Bloomberg survey, more economists are forecasting 0.8%, even though 0.7% is the median forecast. Either a 0.7-0.8% print should further support the underlying positive sentiment towards GBP. But given the move in GBP overnight we think a stronger print maybe now priced in so a 0.7% print could trigger a knee jerk move lower in GBP."
Signs are that markets appear to be forecasting an outcome that sits above consensus.
Lloyds Bank say:
"Our economists forecast GDP growth to have risen by 0.8% q/q, marginally higher than consensus forecasts of 0.7%. Although our economists do highlight some downside risks to their forecasts owing to the surprisingly softer manufacturing and constriction data in November and subdued services output in October.
"Looking at the breakdown on the Bloomberg survey, more economists are forecasting 0.8%, even though 0.7% is the median forecast. Either a 0.7-0.8% print should further support the underlying positive sentiment towards GBP. But given the move in GBP overnight we think a stronger print maybe now priced in so a 0.7% print could trigger a knee jerk move lower in GBP."
