British Pound (GBP): Where are the best opportunities?
Live £ Rates:
- GBP to EUR:1.1979
- GBP to USD:1.2585
- GBP to AUD:1.9392
- GBP to CAD:1.7749
- GBP to NZD:2.1516
- GBP to ZAR:22.8236
15:56: Watch out for Carney
"After the close of the European and UK markets, BoE Carey will give a speech in the City in London. One can expect him to defend the merits of forward guidance. With cable close to important support, markets will look out for any hints of Carney on the valuation of sterling." - Piet Lammens @ KBC Markets.
15:25: GBP-USD "best trading opportunity would occur with the clearance of recent low"
This assessment on the Cable from the team at Gainsy:
"GBP/USD found support for the second consecutive time around the key support of 1.6585 which keeps the short term sideways pattern valid so far. However, the recent advance could be driven only by the US dollar's weakness, so we still need more confirmation for the bullish reversal case which may come with a daily close above the 1.6700 barrier.
"The best trading opportunity would occur with the clearance of recent lows but it will be preferably to see a 4H-close below the 1.6600 handle to confirm the bearish breakout and negate the possibility of a renewed recovery from those levels as seen in the past week.
"The pair is still liable to stage recoveries from the above mentioned support line."
15:19: EUR-GBP could test 0.8440
Camilla Sutton at Scotiabank today warns the UK currency could be about to lose further ground against the euro:
"EURGBP—bullish technicals warn of a test to 0.8440."
This is GBP-EUR at 1.1848.
12:34: The major seller has been a custody bank
More from Swissquote Bank on the GBP selloff:
"The sterling has sold-off aggressively below 1.6600 this morning, alongside with the majority of G10 currencies (except Yen). The main reason is likely to be Putin’s support of Crimea accession.
"We also hear rumours that the major seller has been a custody bank, perhaps based on strategic action. GBP-complex is subject to important macro event/data this week."
12:27: GBP remains fragile
Today just does not belong to sterling, as noted by Emmanuel Ng at OCBC Bank:
"The GBP-USD may attempt to remain aloft on the coat tails of the EUR-USD although a biddish EUR-GBP may temper the cable’s upside at this juncture. The BOE’s Carney is expected to be on the wires at 18:05 GMT while BOE MPC minutes are also due and any negative surprises may tempt the pair below 1.6600 towards the 55-day MA (1.6548)."
11:28: What will revive the fading appetite for sterling?
"On Wednesday, the expectations are flat at 7.2% unemployment; however the risk is rather on the downside given the momentum in unemployment dynamics. We remind that the unemployment in UK eased from 7.8% to 7.1% (in Nov) since the beginning of Carney’s mandate. Any positive surprise (lower unemployment) should revive the fading appetite in sterling." - Ipek Ozkardeskaya at Swissquote Bank.
09:45: Best to wait on the sidelines
An analysis of the GBP-USD by ICN Financial suggests that the current technical setup calls for caution by traders:
"The negative crossover on Linear Regression Indicators 34 & 55 deepened however all attempts for the breakout below 1.6600 support with daily closing below it so far failed. This limits the effect of the negative crossover on LRIs.
"Nevertheless, AROON is slightly biased lower and MACD is moving to the downside and that makes us remain on the bearish side waiting for the daily closing below 1.6600. Therefore, we prefer to remain on the sidelines for now to confirm the move."
08:20: Slump in pound dollar exchange rate
We have no immediate explanation for the current slump, highlighted by the below screenshot:
08:26: Attempt minor longs on pound dollar exchange rate (GBP-USD)
Commerzbank analyst Karen Jones reckons the brave could attempt a Buy on GBP-USD:
"GBP/USD has tested but failed to break the late February low at 1.6585 and is stabilising near term just above the 55 day moving average at 1.6548.
"We note that the Elliott wave counts on the daily, weekly and monthly charts indicate that this is the end phase of the move and we would expect to still see the market struggle ahead of the 1.6822 February high.
"However we have yet to see a sell signal. We suspect that the market will need to break back below 1.6532 (the 8 month uptrend) in order to re-focus attention on to the 1.6259/29 support zone which remains key (September high and the 23.6% retracement of the move up from July 2013)."
Current Commerzbank trade: Square. Recommended Trade: Attempt minor longs 1.6550, stop 1.6530. Exit 1.6710
08:06: UK currency presses bottom of recent ranges, employment data could help
This assessment of the outlook facing the UK currency is offered by Lloyds:
"GBP has been sidelined for the last few days, but continues to press the bottom of recent ranges against the EUR. The main GBP news this week is tomorrow, with the UK MPC minutes, the labour market data and the Budget, and we would see the labour market data in particular as a potential GBP positive.
"However, for today GBP seems likely to be caught in the crossfire between the EUR and the USD. Any EUR/USD strength is likely to drag GBP/USD and EUR/GBP up with it, and vice versa, though at these levels we would see limited upside for EUR/GBP, with good resistance around 0.8380/90."
07:54: Sterling being sold, Wednesday offers support
The UK unit is lower across the board on Tuesday as the correction/sell-off deepens.
As we noted in yesterday's coverage, the pressure will likely persist ahead of this week's busy Wednesday session.
Kathy Lien at BK Asset Management tells us what's on the agenda:
"There are a number of important U.K. event risks on the calendar in the coming week but all of them are concentrated on Wednesday, which means that the first 2 days of trading could be quiet.
"In addition to the annual budget, we have the U.K. employment report and the minutes from the most recent Bank of England monetary policy meeting scheduled for release. Based on the PMIs, the labor market data should be strong and for the most part we do not anticipate a change in the central bank's monetary policy bias because there has not been any major changes in the economy since the last meeting."
