British Pound (GBP) Exchange Rates: Sterling at Key Barrier vs USD, GBP-CAD Irrepressible
- Last Updated: 03 April 2014
Updated: The GBP exchange rate complex has come under pressure once 
more at the start of April with the entire Markit PMI series missing the mark. However, many analysts continue to consider the latest price action as being representative of consolidative price action.
April will be pivotal for the UK unit - can the uptrend reassert itself or will we continue to see more of the same?
Keep in touch with our Live Coverage Here. For the archived material for the day in question please scroll through please scroll down.
By Gary Howes
Today's Sterling (GBP) Rates.
1.1984
1.2586
1.9416
1.7767
2.1544
22.8461
16:21: The month-end flow picture
With month end upon us Barclays analyst Yuki Sakasai considers where the demand lies:
"Global equity markets rebounded strongly in February, helped by tentative signs of stabilisation in EM countries and expectations that the Fed will keep rates low for longer. In USD terms, the US equity market has posted the largest increase in market value, while the change in bond market values was rather limited except for the euro area. Given the relative outperformance of US equity markets, our month-end fixing model is showing a modest USD sell signal against JPY, GBP, CAD and AUD and a weak USD sell signal against EUR."
"Global equity markets rebounded strongly in February, helped by tentative signs of stabilisation in EM countries and expectations that the Fed will keep rates low for longer. In USD terms, the US equity market has posted the largest increase in market value, while the change in bond market values was rather limited except for the euro area. Given the relative outperformance of US equity markets, our month-end fixing model is showing a modest USD sell signal against JPY, GBP, CAD and AUD and a weak USD sell signal against EUR."
15:23: GBP/CAD "just looks irrepressible"
Shaun Osborne at TD Securities considers the bullish formation in GBP/CAD:
"GBPCAD just looks irrepressible. Despite last week’s technical setback, with the GBP stalling around the 1.8550 area, near the January highs, corrective losses have been limited—as we expected—and the underlying bull trend is quickly trying to reassert itself.
"Here too, oscillator studies suggest that the broader bull trend is well-entrenched in the market and that should limit corrective weakness in the GBP from here. We continue to target 1.92 as the technical objective for this move. Sustained gains through the 1.8550/55 area should put the rally back on track pretty quickly."
"GBPCAD just looks irrepressible. Despite last week’s technical setback, with the GBP stalling around the 1.8550 area, near the January highs, corrective losses have been limited—as we expected—and the underlying bull trend is quickly trying to reassert itself.
"Here too, oscillator studies suggest that the broader bull trend is well-entrenched in the market and that should limit corrective weakness in the GBP from here. We continue to target 1.92 as the technical objective for this move. Sustained gains through the 1.8550/55 area should put the rally back on track pretty quickly."
14:41: Yellen in the headlights
Negative investor sentiment has been the dominant force on markets today - the tone saw the USD outbid the GBP while the likes of the CHF and JPY were also picked up.
The next piece to the Thursday puzzle comes later in the form of the US Fed Chairwoman Janet Yellen who is to appear before Congress.
"The only hope for a recovery in risk today lies in the hands of Janet Yellen. The tone of her testimony will either exacerbate or ease the selling in the forex market. Based on the decline in U.S. Treasury yields and steadiness of U.S. equity futures investors don't expect any particularly damaging comments from the brand new head of the Federal Reserve," says Kathy Lien at BK Asset Management.
The next piece to the Thursday puzzle comes later in the form of the US Fed Chairwoman Janet Yellen who is to appear before Congress.
"The only hope for a recovery in risk today lies in the hands of Janet Yellen. The tone of her testimony will either exacerbate or ease the selling in the forex market. Based on the decline in U.S. Treasury yields and steadiness of U.S. equity futures investors don't expect any particularly damaging comments from the brand new head of the Federal Reserve," says Kathy Lien at BK Asset Management.
12:29: GBP at key barrier
The GBP/USD is at 1.6660, a key level say analysts at Gainsy:
"To the downside, we will keep focus on the 1.6600 barrier where 20 HMA and 55 4H-MA are coincided with Fib 38.2% of last rally between 1.6252-1.6823. A break here would suggest a short term topping, thus a possible correction/consolidation toward 1.6450-1.6500 zone."
"To the downside, we will keep focus on the 1.6600 barrier where 20 HMA and 55 4H-MA are coincided with Fib 38.2% of last rally between 1.6252-1.6823. A break here would suggest a short term topping, thus a possible correction/consolidation toward 1.6450-1.6500 zone."
12:53: Why the UK currency will be underpinned in 2014
12:28: Keep an eye on how MPC members vote
More from TD Securities. They reckon that with "the albatross of forward guidance lifted" markets can now focus on counting the votes cast at MPC meetings:
"The BoE officially does not want to specify what and when "gradual" may be, but with the albatross of forward guidance lifted, we may now return to counting the votes of MPC members to glean risks. Weale favours a Spring 2015 hike while McCafferty favours Q2 2015. Pricing in further tightening and steepening into short sterling remains the path of least resistance, meaning gilts 5s10s and 10s30s flatter."
"The BoE officially does not want to specify what and when "gradual" may be, but with the albatross of forward guidance lifted, we may now return to counting the votes of MPC members to glean risks. Weale favours a Spring 2015 hike while McCafferty favours Q2 2015. Pricing in further tightening and steepening into short sterling remains the path of least resistance, meaning gilts 5s10s and 10s30s flatter."
12:18: TD Securities back GBP in coming months
TD Securities have today confirmed that GBP is one of their preferred currencies for the year ahead:
"The GBP has lagged the broader currency move against the USD over the past month although the case for sterling outperformance is perhaps a little more obvious than the EUR.
"UK data trends have been somewhat more constructive. Growth momentum looks very solid relative to the UK’s major economy peers and unemployment has fallen far enough and quickly enough to force the BoE to abandon its forward guidance policy.
"Policy makers are signalling comfort with market-based expectations that rate policy may be tightened in the Spring of 2015. We think the first hike will actually come early in 2015 which should add to GBP underpinning."
"The GBP has lagged the broader currency move against the USD over the past month although the case for sterling outperformance is perhaps a little more obvious than the EUR.
"UK data trends have been somewhat more constructive. Growth momentum looks very solid relative to the UK’s major economy peers and unemployment has fallen far enough and quickly enough to force the BoE to abandon its forward guidance policy.
"Policy makers are signalling comfort with market-based expectations that rate policy may be tightened in the Spring of 2015. We think the first hike will actually come early in 2015 which should add to GBP underpinning."
11:44: Scope for EUR/GBP to fall to 0.80
This forecast on EUR/GBP from UBS:
"The cross remains vulnerable as bearish conditions persist. Fresh selling materialised earlier on Monday after testing resistance at 0.8277. A break below 0.8158 would trigger deeper sell-off to 0.8082."
"The cross remains vulnerable as bearish conditions persist. Fresh selling materialised earlier on Monday after testing resistance at 0.8277. A break below 0.8158 would trigger deeper sell-off to 0.8082."
11:41: Still on for 1.7
Don't discount the GBP rally just yet say RoboForex:
"Pound continues forming consolidation channel near level of 1.6700 and right now is moving downwards to reach level of 1.6580; this movement may be considered as correction. Later, in our opinion, instrument may continue growing up towards level of 1.7000."
"Pound continues forming consolidation channel near level of 1.6700 and right now is moving downwards to reach level of 1.6580; this movement may be considered as correction. Later, in our opinion, instrument may continue growing up towards level of 1.7000."
11:12: Waiting for a break higher vs the Swiss Franc
Kristian Siggaard-Jensen at Saxo Trading Floor has an eye on the GBP/CHF:
"GBP/CHF continues to reverse with the strong sustained buying action that started from February 24.
"With the two-way trading interests seen so far this morning in the European trading hours, we expect that a technical break of the 1.4850 level to the upside would give scope for further bullish momentum and a break of yesterday’s highs. However, we shall only establish this long positioning at the aforementioned break level."
"GBP/CHF continues to reverse with the strong sustained buying action that started from February 24.
"With the two-way trading interests seen so far this morning in the European trading hours, we expect that a technical break of the 1.4850 level to the upside would give scope for further bullish momentum and a break of yesterday’s highs. However, we shall only establish this long positioning at the aforementioned break level."
10:54: Scottish Independence: Currency uncertainty could see Standard Life quit Scotland
The incredibly important issue of currency as regards the Scottish independence debate has been raised on Thursday with Standard Life making it clear that they would quit Scotland if need be:
"I am told by informed sources that unless a formal monetary, regulatory and currency union were agreed by an independent Scotland with the rest of the UK, which also included some kind of compact on taxes, Standard Life would feel obliged to move both funds and people to England." - Robert Peston.
"I am told by informed sources that unless a formal monetary, regulatory and currency union were agreed by an independent Scotland with the rest of the UK, which also included some kind of compact on taxes, Standard Life would feel obliged to move both funds and people to England." - Robert Peston.
10:16: EUR/GBP technical structure remains negative
More from Luyet, this time on the EUR/GBP:
"EUR/GBP continues to weaken as can be seen by the break of the support at 0.8215. Other supports stand at 0.8191 (18/02/2014 low) and 0.8158. Hourly resistances can be found at 0.8257 (25/02/2014 high) and 0.8267.
"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 continues to weaken as can be seen by the break of the support at 0.8215. Other supports stand at 0.8191 (18/02/2014 low) and 0.8158. Hourly resistances can be found at 0.8257 (25/02/2014 high) and 0.8267.
"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)."
09:50: "Technical structure favours a bullish bias
Luc Luyet at MIG Bank says he remains bullish on GBP/USD but some big hurdles exist:
"GBP/USD needs to break the resistance at 1.6742 to confirm a resumption of the underlying uptrend. Another resistance stands at 1.6823. Supports can be found at 1.6584 and 1.6426.
"In the longer term, the technical structure favours a bullish bias as long as the support at 1.6220 (17/12/2013 low) holds. The decisive break of the resistance at 1.6668 opens the way for a move towards the major resistance at 1.7043 (05/08/2009 high). However, a sustainable move above that level is unlikely in the next few weeks."
"GBP/USD needs to break the resistance at 1.6742 to confirm a resumption of the underlying uptrend. Another resistance stands at 1.6823. Supports can be found at 1.6584 and 1.6426.
"In the longer term, the technical structure favours a bullish bias as long as the support at 1.6220 (17/12/2013 low) holds. The decisive break of the resistance at 1.6668 opens the way for a move towards the major resistance at 1.7043 (05/08/2009 high). However, a sustainable move above that level is unlikely in the next few weeks."
09:27: GBP vulnerable to USD moves
"GBP/USD traded lower yesterday due to broad USD strength. GBP/USD continues to trade closely with relative rate spreads. We expect GBP/USD to remain supported by M&A related GBP demand and month-end rebalancing portfolio flows. However, for today with little on the UK calendar GBP/USD will be vulnerable to USD moves. Similarly for EUR/GBP, moves in EUR will likely dominate." - Lloyds Bank.
09:04: GBP/AUD and GBP/NZD sharply higher
The Australian dollar (AUD) is in focus today; GBP/AUD is 0.35 pct up on the day courtesy of mediocre 4Q CAPEX data. The private capital expenditure contracted by -5.2% in the fourth quarter; the AUD complex was sold in aggressive fashion following the release.
The GBP/NZD has also been lifted by a New Zealand trade surplus that narrowed from NZD 493mn (revised) to NZD 306mn in January, the faster than expected drop in exports curbed appetite in NZD.
The GBP/NZD has also been lifted by a New Zealand trade surplus that narrowed from NZD 493mn (revised) to NZD 306mn in January, the faster than expected drop in exports curbed appetite in NZD.
08:10: We doubt the Bank would target sterling
We doubt the BoE would cite pound sterling as a factor in interest rate decision making. Apart from occasional bluster, the Bank doesn't have form on pursuing changes in the exchange rate. Inflation remains the central motive of policy makers and we would have to note that a strong sterling keeps inflation lower, primarily by keeping imported fuel prices lower.
08:04: Euro pressures set to remain with us
The euro was one of the worst performing majors yesterday. Today could offer us further EUR under-performance.
"We expect the euro to remain under pressure following ECB Board Member Mersch’s remark that the ECB is taking a wide-angle look at its monetary-policy stance ahead of its meeting next week. Markets now seem to be strongly fixated on tomorrow’s release of preliminary EMU CPI, which is likely to come in very soft." - L.Cazzulani at UniCredit Bank.
"We expect the euro to remain under pressure following ECB Board Member Mersch’s remark that the ECB is taking a wide-angle look at its monetary-policy stance ahead of its meeting next week. Markets now seem to be strongly fixated on tomorrow’s release of preliminary EMU CPI, which is likely to come in very soft." - L.Cazzulani at UniCredit Bank.
08:03: Pound sterling to be held back by its own success
More from Cazzulani as he addresses the outlook for the British pound:
"A recovery of the USD will very likely limit the upside potential of cable. In this respect we also take into account recent remarks by MPC member McCafferty that market expectations of a first BoE rate hike in spring next year were not unreasonable, but further sterling strength would be a worry and could delay a rate hike."
"A recovery of the USD will very likely limit the upside potential of cable. In this respect we also take into account recent remarks by MPC member McCafferty that market expectations of a first BoE rate hike in spring next year were not unreasonable, but further sterling strength would be a worry and could delay a rate hike."
08:00: USD rally to continue
We have seen the US dollar make a comeback in the previous session. Commenting on the outlook for FX markets today, L.Cazzulani at UniCredit in Milan says:
"Risk appetite on FX markets is likely to remain low as developments in Ukraine are causing uncertainty. On the back of this, the USD recovery should continue, as Janet Yellen will unlikely change her view regarding continuing gradual tapering of US assets at today’s hearing before the Senate Banking Committee."
"Risk appetite on FX markets is likely to remain low as developments in Ukraine are causing uncertainty. On the back of this, the USD recovery should continue, as Janet Yellen will unlikely change her view regarding continuing gradual tapering of US assets at today’s hearing before the Senate Banking Committee."
07:54: Pound euro rally loses momentum
The British pound to euro exchange rate has moved steadily higher over the past 24 hours but appears to have run into resistance at levels around 1.2180.
Interestingly, overnight analysts at Recognia detected a Short-Term Bearish Momentum signal form on the GBP/EUR chart. The signal formed at the close of 1.2181; a note on the matter says the price may fall from this level. Momentum to the rally has slipped into negative territory.
Interestingly, overnight analysts at Recognia detected a Short-Term Bearish Momentum signal form on the GBP/EUR chart. The signal formed at the close of 1.2181; a note on the matter says the price may fall from this level. Momentum to the rally has slipped into negative territory.
24 hour highlights for the British pound (GBP)
Below are some of the highlights contained in our live reporting of Wednesday's session:UBS bullish on the outlook for GBP/USD Buy GBPUSD above 1.6660 UK GDP data on target, business investment impresses Keep selling EUR/GBP on upticks GBP/EUR powers higher
