Pound Sterling LIVE: GBP Outlook Deteriorates vs NZ and Australian dollars, Positive vs Euro and Dollar
- Written by: Gary Howes
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The British pound (Currency:GBP) is rangebound against the US dollar and Euro on Thursday morning; fresh weakness is being witnessed against the commodity currencies.
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Euro pound still bearish
"EUR/GBP consolidates weakness below the 50-dma (0.82822), trend and momentum indicators remain comfortably bearish suggesting extension of weakness towards 0.82042 (March 5th low). Option related offers are placed at 0.83000/0.83015, more offers trail below 0.82000/0.82250." - Swissquote Research.
TD Securities confirm 1.92 target on GBP-CAD
The last two months have been slow for the sterling / Canadian dollar pairing. A recent breakdown has failed leading analyst Shaun Osborne at TD Securities to reaffirm his bullish call on the pair:
"GBPCAD is tantalizingly close to a break above the short-term bear trend channel in place since late March and a clearer return to the 1.8275/1.8645 range that held the cross through February/March. Short-term price signals suggest strong selling interest through the low 1.83 area intraday and this is preventing a stronger push higher at the moment.
"We think price signals earlier in the week indicated a low/reversal (bullish “morning star” signal developed Friday through Tuesday) but the failure to “confirm” the rebound by extending higher still leaves a bit of a question mark over the state of the recovery. We are leaning bullish here (we still target 1.92) but we would prefer to see gains push on through the mid 1.83s to confirm."
Earnings growth to prompt rate rise at Bank of England say Barclays
"If the recovery is sustained and real average earnings return to growth this year, as we expect, the conditions will be in place for the MPC to start normalising policy next year and waiting beyond Q2 may risk hitting the inflation target in the medium term." - Barclays.
No change at the Bank
The Bank of England’s Monetary Policy Committee (MPC) left policy unchanged as expected. Bank Rate remained at 0.5% and the stock of asset purchases at £375bn. As is usual with a no-change decision there was no material statemen
Don't bet on easy GBP gains from here
As today's price action has confirmed, the outlook is not all plain sailing for the the GBP. Piet Lammens at KBC Markets tells us:
"The technical picture in the major sterling cross rates was mixed, but
this week’s rebound brings sterling within reach of important resistance.
"Cable recently rebounded off the 1.6460 low and the 1.6823 cyclical top was almost reached this morning. For now, we maintain the view that the top won’t be easy to break in a sustainable way, but broad dollar weakness might spoil the game.
"EUR/GBP is nearing the 0.8200/0.8157 support area. The sterling momentum is constructive, but a break will probably be difficult as long as the euro remains well bid across the board."
Overnight bearish development on the GBP-EUR
The pound euro could be losing momentum. An overnight close at 1.2121 saw the formation of a negative "Commodity Channel Index" indicator.
"This bearish signal indicates that the price may fall from the close of 1.2121," say Recognia Inc.
Attempt minor longs say Commerzbank
This from Karen Jones at Commerzbank:
"GBP/USD has inched higher and this leaves pressure still on the topside and the market capable of retesting the 1.6822 recent high. The Elliott wave count on the 240 minute chart is suggesting scope to 1.6900.
"Current trade: Square Recommended Trade: Attempt minor longs 1.6735, add 1.6720, stop 1.6680. Partially cover 1.6820 and exit the remainder 1.6895."
Years highs on the horizon for Cable
"GBP/USD has traded firmer this week helped by broad USD weakness and some stronger domestic data. With little else on the UK calendar today, we expect USD sentiment to drive GBP/USD. The year's high of 1.6823 is now in sight for GBP/USD." - Lloyds Bank Research
Negative outlook vs the NZ and Aus dollars
On Thursday morning the British pound is being buffeted by the New Zealand and Australian dollars. However, recent ranges against the Canadian currency are being defended.
New-found strength against the euro and US dollar is being maintained; the outlook against these two currencies is decidedly more positive.
Overnight: Bank of England rate announcement, ECB members to speak
The Bank of England rate announcement at midday looks likely to be a non-event. No changes to monetary policy are expected today, and we also expect no accompanying statement.
Regarding the pound euro exchange rate, keep a watch on ECB members Praet and Constanico who are due to speak today; their comments will likely attract some market attention.
