British Pound Exchange Rates See Gains Vanish
- Last Updated: 04 April 2014
Updated: The GBP is an underperformer on the first Friday of April. With US Non-Farm
Those hoping for the pound sterling uptrend to re-establish itself will be disappointed. The deterioration in the GBP-CAD uptrend (image at righ) is representative of the malaise being seen by many of the CAD crosses.
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NOTE: For Monday the 24th of March's live coverage, please visit here.15:52: Today's GBP action
"GBP followed the trading pattern of EUR/USD and drifted slightly higher throughout the session. However, in a daily perspective, the gains were very small.
"EUR/GBP is changing hands in the 0.8365 area at the moment of writing compared to yesterday’s close of 0.8349. For now, the 0.8400 resistance looks safe, but as is the case for EUR/USD, further confirmation is needed to conclude that the topside is blocked. The price swings in cable were even smaller. The pair hovered directionless in a tight range around." - KBC Markets.
14:46: UK £ in deeply oversold territory
"The effect of USD strength following the FOMC meeting is likely to fade against sterling as well, particularly since cable is currently in deeply oversold territory.
"We expect the cross to rebound next week, triggered by above-consensus readings in both British CPI and retail sales.
"We should also mention the robust underlying support from the latest BoE minutes in which the bank did not display any discomfort with a strong currency, as well as the cushion emanating from the pickup in business investment. This is also likely to provide EUR - GBP with some correction potential."
14:33: AUD resilience seen in 2014
For those watching the GBP-AUD exchange rate we have just posted the findings of the team at Bank of America Merrill Lynch on the outlook for the Aus dollar this year and into next. The Australian currency is likely to retain a notable resilience going forward.
11:31: Euro pound exchange rate
An update on the pound's attempts to regain ground against the euro from Luc Luyet at Swissquote:
"EUR/GBP has thus failed to break the resistance at 0.8405 (25/12/2013 high) and has invalidated its short-term succession of higher lows. However, the technical structure favours a move towards the key resistance at 0.8467 as long as the support at 0.8321 (11/03/2014 low) holds. An initial resistance lies at 0.8377 (intraday high). Another support can be found at 0.8263 (intraday low).
"In the longer term, the breakout of the resistance at 0.8350 (13/01/2014 high) validates a base formation with an implied upside potential at 0.8532. Key resistances stand at 0.8464 (13/11/2013 high) and 0.8585 (29/10/2014 high)."
10:25: Commerzbank say Sell the rallies
"GBP/USD has eroded the 55 day moving average and the 8 month uptrend at 1.6551.
"We have seen a second close below the 8 month uptrend and this should be enough to 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). We suspect that the 1.6649 20 day ma will now cap intraday rallies.
"Current trade: Square Recommended Trade: Sell rallies to 1.6550, add 1.6650, stop 1.6665. Exit 1.6260."
10:05: "Next resistance 1.6545/50 area"
This note from Sean Lee at FXWW on the dynamics behind the UK currency:
"Cable hit into some bids at 1.6475 (also Fib support), but continues to looking weak and techs are indicating further losses
"Dealers note not much on the order books until 1.6425 (near the 100 daily MA)
"To the topside, Asian offers lined up at 1.6520; then next resistance 1.6545/50 area
"No data releases out of the UK today; focus will be on flows/techs."
09:56: GBP-USD below 1.65 looks attractive
"Sterling has surely suffered from the latest wave of USD buying, but given prospects of firmer UK growth and our expectations of a BoE rate hike later this year, investors may start viewing cable below 1.65 as attractive and also consider buying sterling vs. some other FX majors." - UniCredit Bank.
09:50: Recovery shaping up
The UK unit is recovering. Could it be the good public sector financial figures? Government borrowing came in at £7.478m, below the forecasted £8.550.
08:55: Government borrowing ahead
The only economic snippet on the British Pound (Currency:GBP) agenda today concerns Public Sector Net Borrowing (Feb). Borrowing of £8.550BN is expected, last month we had a surplus of £-6.425B.
The impact on sterling will likely be limited.
08:54: "GBP still better positioned"
08:38: Is the dip below 1.65 temporary?
Don't panic say Lloyds Bank in a morning note to clients:
"While UK current account problems may prove a negative for GBP going forward, we doubt that this will be an immediate reason for GBP to decline, so for now we would expect GBP/USD to continue to find support below 1.65."
08:35: Selling of sterling resumes
A bad start for the UK currency on Friday morning; selling pressure is being encountered right across the board. The GBP-EUR is back in the mid 1.19's and the GBP-USD is 0.17 pct lower at 1.6480.
Losses are also being seen across the commodity complex with GBP-CAD, GBP-AUD and GBP-NZD registering losses.
08:10: Mid-week pick up for GBP
Further, "while there is no direct reason for the perception of a slightly more hawkish Fed to have any big impact on the perceptions of UK policy, there has been a clear correlation of policy biases in the two countries of late, and until there is a clear outperformance in US data, it is unlikely that GBP will lose ground on the basis of yield spreads."