British Pound in a Day of Selling: GBP-EUR Exchange Rate at 1.20

Updated: The British Pound (GBP) is stable as we move into the second week of April. Selling on global equity markets has seen some relief being enjoyed against the commodity dollars. Meanwhile, we continue to see consolidation vs the Euro and US dollar. 

This period of consolidation will inevitably give the sterling bulls hope that the 2014 rally can ultimately reassert itself.

For the latest, see our live coverage section. For the archived material you clicked for, please scroll down. 

Live Exchange Rates

The Pound Sterling (GBP) vs:

• The euro (GBP EUR):
  1.2024
• The US dollar (GBP USD):
  1.2532
• The Aus Dollar (GBP AUD):
  1.9231
• The Canadian Dollar (GBP CAD):
  1.7483
• The New Zealand Dollar (GBP NZD):
  2.1478
• The South African Rand (GBP ZAR):
  22.7019

16:46: Repositioning away from sterling?

According to KBC Markets, the British pound has today faced a substantial setback:

"Constructive sterling sentiment evaporated today. Sterling fell prey to a long squeeze, both against the euro and the dollar.

"We didn’t see an exact trigger. Technical considerations might have played a role as EUR/GBP did break above the 0.8300 barrier. In cable the topside had become tough as the 1.6823 resistance was/is a hard not to crack.

"M&A related news might have played a role, too (Vodafone reached a deal to buy Spanish cable group Ono). BoE’s Bean in a speech warned that further sterling strength wouldn’t be particularly helpful for UK exports.

"Sterling lost a few more ticks after these headlines but at that time most of the intraday losses were already on the screens. Whatever the reason, sterling faced a substantial setback. EUR/GBP tried a test of the 0.8350 range top, but a real break didn’t occur (yet)."

15:57: GBP-USD gains to 1.7 put on hold for 'several more weeks'

A forecast note from currency brokerage Afex reckons the bull case for GBP-USD remains intact, however a dissipation of bullish momentum has postponed further gains:

"Prices here arguably broke through their equivalent descending resistance level (at 1.6250) some time ago with an important bottom formation thus confirmed already. However the proximity of historical resistance around 1.7000 might conceivably limit additional gains for several more weeks at least.

"Should this latter level give way enough compression already exists to enable an extension nearer 1.8500 initially. However the recent dissipation of positive momentum could postpone this upside resolution in favour of further choppy range trading as attention is currently focused elsewhere."

15:12: 'Huge' desire to sell sterling

"The pound is lower on the day, falling 0.5 percent versus the USD on huge volume this morning, following comments by the Bank of England that further GBP strength are not helpful for U.K. exports." - Jean-Pierre Doré at Western Union.

13:24: Further Sterling Rise Wouldn't Be Helpful For Net Exports

More from Bean: Further Sterling Rise Wouldn't Be Helpful For Net Exports. Sees Bank Rate Rising to 2-3% Range.

"Any further appreciation of sterling, which has risen almost 10 percent in trade-weighted terms since March, would not be particularly helpful in terms of facilitating a rebalancing towards net exports," Bean said.

Last month Ian McCafferty, who sits alongside Bean on the BoE's rate-setting Monetary Policy Committee, also said further sterling strength would be a worry and could potentially make the bank delay raising interest rates.

13:17: No interest rate above 5% for a long while

The Bank of England's Monetary Policy Committee continue to desperately talk interest rate expectations lower. If sterling's performance were to be a judge of this then they are doing a good job.

Today the BoE's Bean has said any interest-rate increases will be gradual – UK rate will remain materially below 5%.

The pound's losses against the EUR extend: "EURGBP continues its rally from last week - now approaching resistance at 2014 highs near .8350," says Matt Weller at GFT.

12:36: Where next for EUR-GBP?

Ipek Ozkardeskaya at Swissquote Research says a lack of conviction amongst GBP bulls bodes well for further gains in EUR-GBP:

"The bullish trend in EURGBP gained pace post-ECB last week. The pair broke the broad downtrend channel top (0.82900) and rallied to the 100-dma (currently at 0.83298). The timid bulls in GBP should keep the pair in the bullish consolidation zone. Next key resistance stands at 0.83915 (Fibonacci 61.8% on Aug’13 – Feb’14 drop). On the downside, support is eyed at 0.83000 (optionality), then 21&50 dma (0.82448/630)."

12:24: No meaningful rebound in sight

"The pound continues to lose ground against most of its major currency pairs and a light calendar in the days ahead will make it even more difficult for the pound. GBP/EUR has managed to hold on to levels of above 1.20 and despite a decent nonfarm payroll reading, levels in cable remain elevated. We may have to wait till next week before sterling will be able to make any meaningful rebound." - Sasha Nugent at CaxtonFX.

12:16: Markets in the red, Sterling in the red

The FTSE 100 has sold-off again and is now lower on the day. Those hoping for a recovery in the likes of GBP-CAD, GBP-AUD and GBP-NZD will be disappointed as this move lower in risk assets has not kick-started fresh interest in the UK currency.

The GBP-EUR is now a further half percent in the red. The scale of the decline is an eye-opener for us.

11:30: EUR-GBP upside won't be easy

It may be one-way traffic in EUR-GBP at present, but how long can it last?

"Sterling remains also well bid and EUR/GBP remains well anchored in the 0.8160/0.8350 trading range. Even after the ECB meeting, we think that the topside of this range remains tough to break, as long as UK eco data remain reasonably strong." - Piet Lammens at KBC Markets.

10:44: Easiest way is up (For now at least)

A weekly forecast note from ICN Financial confirms that the easiest way forward for GBP-USD remains higher, for now at least:

"The pair traded last week within a sideways range after the sharp drop with the kick-start of trading last week. The pair is stable above the Linear Regression Indicator 55 and above 1.6600 and that keeps the bullish bias intact.

"We will depend this week on stability above 1.6600 to favor bullishness, but a daily closing above 1.6750 is now required to support the positive outlook. AROON shows a drop in upside momentum and MACD is trading sideways and that requires a breach of 1.6750 to confirm the intraday upside move."

10:38: Heavy demand for EUR-GBP

The following insights from Sean Lee at FXWW:

09:44: UK currency under pressure

We are now seeing even deeper losses against the euro, the rate is close to breaking through the 1.2 barrier. In addition, the currency is has lost ground against the commodity currencies (AUD, NZD, CAD ZAR), these were the bright spot for the GBP this morning. We note this decline coincides with a rally on the FTSE 100.

09:39: Key levels for Cable

"The Cable remains ranged with trend and momentum indicators marginally on the upside. The MACD (12, 26) indicator will remain in the green zone for a daily close above 1.6741. Option bids are to be tipped above 1.6775 in today’s expiry, offers are seen below 1.6700. The key short-term support is eyed at 1.6660 (21-dma)." - Swissquote Bank.

08:45: Why are the Australian, New Zealand and Canadian dollars lower today?

The AUD, CAD and NZD are suffering a bout of weakness this morning alongside week equity markets. Sending these currencies lower was news that China’s trade balance marked an unexpected deficit in February, at USD -23bn.

Exports were down 18.1% yoy (consensus: + 7.5%). CNY opened down 0.5%, marking the biggest daily fall since 2008.

08:33: Still bearish on EUR-GBP

The British pound is still favoured over the EUR at UBS, this despite the weakness we are seeing at present. Concerning the EUR-GBP, analyst Gareth Berry says:

"The latest bounce doesn’t yet change the bearish picture as long as resistance holds at 0.8350. There’s scope for weakness in the near-term to break below support at 0.8158 and then onto test 0.8082."

08:29: UniCredit question ability of the euro to head further

"US labor data are likely to dent only marginally cable’s strength for now, with GBP-USD seen again struggling close to 1.67. At the same time, we still do not see greater EUR-GBP upside potential above 0.83." - UniCredit Bank.

In GBP-EUR terms that is 1.2048 and chimes with our own view on the matter (See below).

08:27: Sterling euro exchange rate could test 1.20

The decline in the GBP/EUR is quite marked and indeed aggressive. We do however believe the real test will occur at 1.20 - can this important support level hold? With the UK economic recovery easily outpacing that of the Eurozone we question the ability of the euro to inflict lasting damage on this pair.

08:16: Bullish conditions persist for Cable

Regarding the GBP-USD, we hear from UBS: "As bullish conditions persist, there’s potential for more upside in the near-term to resistance at 1.6878. A break above this will open critical resistance at 1.7043. Support is at 1.6584."

British Pound (GBP) remains well supported at start of new week

At the start of a new week Lloyds Bank Research says despite some recent declines, the UK currency remains well supported:

"GBP remains well supported by continued strength in domestic data, but has slipped back against the EUR (and CHF) in recent days following the lack of any new easing action at the ECB meeting.

"While GBP still has potential to gain ground against the EUR in more risk positive conditions, there is little to change the picture on today’s calendar, and any GBP gains may well have to wait for more data later in the week, with industrial production tomorrow the first data of any note.

"Against the USD, the slightly better US numbers on Friday suggest GBP/USD is capped for now and a test back to 1.6650 may be seen near term."