British Pound (GBP) LIVE: Latest Sterling Predictions, News and Views on Monday
- Last Updated: 07 April 2014
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.
By Rob Samson
Latest exchange rates
- £ vs Euro:1.2024
- £ vs Dollar:1.2532
- £ vs Australian Dollar:1.9231
- £ vs Canadian Dollar:1.7483
- £ vs New Zealand Dollar:2.1478
- £ vs Rand:22.7019
16:30: GBP should benefit from a healthy balance between buyers and seller in speculative markets
While GBP positioning is still showing as modestly net long on the close on the 14th, GBP came under pressure through most of last week and it is likely that positioning was close to square coming into the retail sales data on Friday.
"The surprising strength of these numbers triggered a GBP rally, but it is doubtful that there was time for the market to re-establish long positions in response to the data. So while GBP is now at similar levels to those seen last Tuesday, positioning may now be flatter than it was, suggesting more potential GBP upside. The UK labour market data this week, and to a lesser extent the MPC minutes, could be a trigger for this," says a comment on the positioning issued by Lloyds Bank Research.
Data from the major US futures & options exchanges (CFTC) are released each Friday evening and report positions up to the close of business on the previous Tuesday.
Traders are classified as either commercial or non-commercial. The positioning of the non-commercial traders can be used as a proxy for the speculative side of the market. Extreme net long or net short positions are taken as an indication of the market’s vulnerability to a sharp reversal and are identified by the interpretation of positioning ‘percentile’ vs historical norms.
So with GBP positioning being seen as being well balanced the possibility of hefty technical reversals is less likely.
"The surprising strength of these numbers triggered a GBP rally, but it is doubtful that there was time for the market to re-establish long positions in response to the data. So while GBP is now at similar levels to those seen last Tuesday, positioning may now be flatter than it was, suggesting more potential GBP upside. The UK labour market data this week, and to a lesser extent the MPC minutes, could be a trigger for this," says a comment on the positioning issued by Lloyds Bank Research.
Data from the major US futures & options exchanges (CFTC) are released each Friday evening and report positions up to the close of business on the previous Tuesday.
Traders are classified as either commercial or non-commercial. The positioning of the non-commercial traders can be used as a proxy for the speculative side of the market. Extreme net long or net short positions are taken as an indication of the market’s vulnerability to a sharp reversal and are identified by the interpretation of positioning ‘percentile’ vs historical norms.
So with GBP positioning being seen as being well balanced the possibility of hefty technical reversals is less likely.
16:22: Deutsche Bank "FX Regime Machine" favours GBP and USD
George Saravelos at Deutshce Bank tell us GBP and USD are set to benefit from current FX market drivers:
"Cross currency correlations have collapsed to their lowest level for a year meaning. Trendiness is bouncing from low levels and realised volume is extremely low. This trading environment is perfect for cross trades.
"Turning to drivers, monetary policy expectations are the strongest driver of FX in G10.
"Growth is also highly positively correlated to FX, suggesting that currencies with favourable cycles like USD and GBP should perform well but also that market pricing of rates is critical."
What is the FX Regime Machine? The instability of market drivers means that identifying the regime under which markets are operating is one of the most important inputs into the FX investment process. It is precisely this question which the Deutsche Bank FX Regime Machine aims to answer.
"Cross currency correlations have collapsed to their lowest level for a year meaning. Trendiness is bouncing from low levels and realised volume is extremely low. This trading environment is perfect for cross trades.
"Turning to drivers, monetary policy expectations are the strongest driver of FX in G10.
"Growth is also highly positively correlated to FX, suggesting that currencies with favourable cycles like USD and GBP should perform well but also that market pricing of rates is critical."
What is the FX Regime Machine? The instability of market drivers means that identifying the regime under which markets are operating is one of the most important inputs into the FX investment process. It is precisely this question which the Deutsche Bank FX Regime Machine aims to answer.
16:00: GBP itching to move higher
More from Shaun Osborne, this time on the outlook for GBP/CAD which has displayed a rather solid looking upward trend. (See today's Canadian dollar forecasts here).
"GBP/CAD is itching to move higher. While bearish CAD momentum has stalled on the short-term, studies elsewhere, GBP/CAD sees the positive bias sustained across a range of short, medium and long-term timeframes still.
"GBP gains have been capped below 1.80 over the past week but there is no evidence of any significant push back in the market and support in the high 1.87s/low1.88s has held up very well. That has the look of market that really wants to trade higher from here still. Look for gains through 1.80 to take the cross to 1.8200/50 pretty quickly (we think 1.90 is reachable further out)."
"GBP/CAD is itching to move higher. While bearish CAD momentum has stalled on the short-term, studies elsewhere, GBP/CAD sees the positive bias sustained across a range of short, medium and long-term timeframes still.
"GBP gains have been capped below 1.80 over the past week but there is no evidence of any significant push back in the market and support in the high 1.87s/low1.88s has held up very well. That has the look of market that really wants to trade higher from here still. Look for gains through 1.80 to take the cross to 1.8200/50 pretty quickly (we think 1.90 is reachable further out)."
15:35: EUR/GBP — Bearish Below 0.8245/55
Shaun Osborne at TD Securities says he sees the euro/sterling rate easing lower:
"UK unemployment data Wednesday may provide the catalyst for the next leg down in EURGBP. We look for positive data (unemployment rate dropping 0.2 points to 7.2%), bringing the BoE’s 7.0% unemployment threshold within reach (possibly as soon as next month).
"Additionally, UK media reported today that the IMF was poised to raise UK GDP growth forecasts to 2.4% (from 1.9%). A clear push below the recent range floor in the mid 0.82 area should allow EURGBP to ease back to the 0.8150 area at least."
"UK unemployment data Wednesday may provide the catalyst for the next leg down in EURGBP. We look for positive data (unemployment rate dropping 0.2 points to 7.2%), bringing the BoE’s 7.0% unemployment threshold within reach (possibly as soon as next month).
"Additionally, UK media reported today that the IMF was poised to raise UK GDP growth forecasts to 2.4% (from 1.9%). A clear push below the recent range floor in the mid 0.82 area should allow EURGBP to ease back to the 0.8150 area at least."
13:06: Dips in Sterling continue to look positive
Lucy Lillicrap at Afex Markets plc says GBP is likely to find broad-based support going forward:
"So far as Sterling is concerned dips continue to look positive in GBP/EUR and GBP/JPY terms and this should underpin GBP/USD going forward.
"However expecting this pairing to advance significantly in the current climate is possibly too optimistic and historical resistance at 1.7000 further limits daily/weekly upside potential as well.
"GBP prices spurned an obvious opportunity to range break on the downside in 2013, leaving in place a broad holding pattern either side of 1.6000, and thus although GBP/EUR upside performance has been erratic this pairing should be able to take advantage of a neutral/weak EUR/USD and a neutral/strong GBP/USD to advance further during 2014."
"So far as Sterling is concerned dips continue to look positive in GBP/EUR and GBP/JPY terms and this should underpin GBP/USD going forward.
"However expecting this pairing to advance significantly in the current climate is possibly too optimistic and historical resistance at 1.7000 further limits daily/weekly upside potential as well.
"GBP prices spurned an obvious opportunity to range break on the downside in 2013, leaving in place a broad holding pattern either side of 1.6000, and thus although GBP/EUR upside performance has been erratic this pairing should be able to take advantage of a neutral/weak EUR/USD and a neutral/strong GBP/USD to advance further during 2014."
12:07: Can EUR/GBP breach 0.8380?
ICN Financial give their euro pound exchange rate forecast:
"The pair resumed negative trading last Friday and approaching the Falling Wedge support at 0.8220, where we expect an upside rebound from that level targeting the Wedge resistance at 0.8380. Stochastic and MA 50 & 100 explain the current downside move and the pair requires stability above 0.8220 to support positivity in the coming days, where the upside move remains favoured with targets extending toward 0.8570 after the breach of 0.8380."
"The pair resumed negative trading last Friday and approaching the Falling Wedge support at 0.8220, where we expect an upside rebound from that level targeting the Wedge resistance at 0.8380. Stochastic and MA 50 & 100 explain the current downside move and the pair requires stability above 0.8220 to support positivity in the coming days, where the upside move remains favoured with targets extending toward 0.8570 after the breach of 0.8380."
11:28: A further long-term rise seen in GBP/USD
Luc Luyet at MIG Bank has the following pound / dollar prediction:
"GBP/USD has bounced sharply near the support at 1.6305. A short-term bullish flag is favoured as long as the initial support at 1.6396 (intraday low) holds. Hourly resistances stand at 1.6464 and 1.6517.
"The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the strong resistance at 1.7043 (05/08/2009 high). However, a break of the support at 1.6220 would negate this positive outlook. Another key resistance lies at 1.6747 (28/04/2011 high)."
"GBP/USD has bounced sharply near the support at 1.6305. A short-term bullish flag is favoured as long as the initial support at 1.6396 (intraday low) holds. Hourly resistances stand at 1.6464 and 1.6517.
"The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the strong resistance at 1.7043 (05/08/2009 high). However, a break of the support at 1.6220 would negate this positive outlook. Another key resistance lies at 1.6747 (28/04/2011 high)."
10:55: No signs of a euro comeback at this stage
The pound to euro exchange rate remains firm, but can this situation prevail? Piet Lammens at KBC Markets says:
"This morning, the January Rightmove house price rose 1.0% M/M and 6.3% Y/Y. EUR/GBP declined a few ticks this morning and is holding near the 0.8235/25 support. Later today, the UK calendar is empty and the EMU one contains only second tiers data. So, technical considerations will prevail.
"We look out whether the euro decline will continue. At least for now, there is no indication that the euro is preparing a comeback. Sustained trading below the 0.8225 support hurts the technical picture of EUR/GBP. Such a break can already occur today, but we need confirmation via more strong UK data to before speaking about a new upleg of sterling.
"In this respect, Wednesday’s UK labour market data might play an important role. A sharp decline in the number of unemployed and/or the unemployment rate will raise speculation that the BoE might be forced to raise rates earlier than expected."
"This morning, the January Rightmove house price rose 1.0% M/M and 6.3% Y/Y. EUR/GBP declined a few ticks this morning and is holding near the 0.8235/25 support. Later today, the UK calendar is empty and the EMU one contains only second tiers data. So, technical considerations will prevail.
"We look out whether the euro decline will continue. At least for now, there is no indication that the euro is preparing a comeback. Sustained trading below the 0.8225 support hurts the technical picture of EUR/GBP. Such a break can already occur today, but we need confirmation via more strong UK data to before speaking about a new upleg of sterling.
"In this respect, Wednesday’s UK labour market data might play an important role. A sharp decline in the number of unemployed and/or the unemployment rate will raise speculation that the BoE might be forced to raise rates earlier than expected."
10:31: Investec see GBP/AUD at 2
The rally in the GBP/AUD could run yet further. We hear from Investec as to why Sterling is firm on Monday and where it is predicted to go from here:
"UK Retail Sales for December released on Friday emphatically beat consensus estimates as shoppers across the country took advantage of heavy discounting in the sales. Retail sales are not a direct input into GDP calculations yet nonetheless there was a strong reaction from the market as economists and analysts clambered to find out why the headline numbers were so much stronger than expected.
"Sterling rallied hard against all of the majors with GBPUSD and GBPEUR gaining almost a cent after the release. As news trickled in about possible causes of the strong number; specifically that there were inaccuracies in seasonal adjustments on internet sales, this put a cap on the GBP rally but GBP still held onto strong gains across the board and GBPUSD barely retracing from the mid 1.64s.
"GBPUSD opens today in the lower 1.64s while GBPEUR is just shy of the year's high of 1.2150. Another notable winner has been GBPAUD as AUD hits 4 year lows against the USD. GBPAUD has continued to rally hard with 2.0000 starting to move into sight as a longer term target."
"UK Retail Sales for December released on Friday emphatically beat consensus estimates as shoppers across the country took advantage of heavy discounting in the sales. Retail sales are not a direct input into GDP calculations yet nonetheless there was a strong reaction from the market as economists and analysts clambered to find out why the headline numbers were so much stronger than expected.
"Sterling rallied hard against all of the majors with GBPUSD and GBPEUR gaining almost a cent after the release. As news trickled in about possible causes of the strong number; specifically that there were inaccuracies in seasonal adjustments on internet sales, this put a cap on the GBP rally but GBP still held onto strong gains across the board and GBPUSD barely retracing from the mid 1.64s.
"GBPUSD opens today in the lower 1.64s while GBPEUR is just shy of the year's high of 1.2150. Another notable winner has been GBPAUD as AUD hits 4 year lows against the USD. GBPAUD has continued to rally hard with 2.0000 starting to move into sight as a longer term target."
10:20: UBS bullish on GBP/USD
"Having tested the main support at 1.6317, the risk is for extension of the consolidation phase within a bullish trend. Next support is at 1.6220. Resistance is at 1.6517 ahead of 1.6622." - Gareth Berry at UBS.
09:06: No sustained rally for GBP yet
"Strong UK retail sales in December (+2.8% mom) boosted cable on Friday, but its inability to rally much above 1.64 indicates caution for a more sustained rally at the moment. Markets will likely await the release of the unemployment report and BoE minutes on Wednesday. Selling EUR-GBP into rally, especially above 0.8280/0.83, still seems profitable." - UniCredit Bank.
08:44: GBP predictions: Sterling to be well supported ahead of BoE Minutes, employment data
The strong retail sales reading out at the end of last week are predicted to keep GBP supported ahead of this week's event risks.
"We expect the strong number will be sufficient to keep GBP well supported today, and GBP looks likely to hold firm ahead of Wednesday’s labour market statistics, when more GBP positive news is expected. The market is forecasting another tick lower in the unemployment rate to 7.3% with another sizable drop in claimant count.
"This will likely prompt markets to question the BoE’s forward guidance, and its revised projection of the unemployment threshold reaching 7% in mid-2015. The BoE MPC minutes will also be closely watch for the committee’s latest thinking on the strength of the sterling at the end of last year, and the recent improvement in the labour market." - Lloyds Bank Research.
"We expect the strong number will be sufficient to keep GBP well supported today, and GBP looks likely to hold firm ahead of Wednesday’s labour market statistics, when more GBP positive news is expected. The market is forecasting another tick lower in the unemployment rate to 7.3% with another sizable drop in claimant count.
"This will likely prompt markets to question the BoE’s forward guidance, and its revised projection of the unemployment threshold reaching 7% in mid-2015. The BoE MPC minutes will also be closely watch for the committee’s latest thinking on the strength of the sterling at the end of last year, and the recent improvement in the labour market." - Lloyds Bank Research.
08:25: British Pound (GBP) boosted by retail sales numbers
Sterling starts a new week on a firm footing thanks to news on Friday that UK retail sales rose sharply in December, much stronger than expected.
Analysts at Lloyds Bank are however cautious on what the figures represent from a wider perspective:
"This was primarily due to seasonal adjustments with the unadjusted print broadly in line with previous years. Nevertheless the market reacted to the strong headline number and GBP consequently rallied.
"Retail sales are not a direct input into GDP calculations and historically have been a relatively poor indicator of consumer spending. Furthermore, retail sales slowed to 0.4% q/q in Q4 from 1.5% in Q3; therefore it’s difficult to suggest this print poses upside risks to Q4 GDP.
Analysts at Lloyds Bank are however cautious on what the figures represent from a wider perspective:
"This was primarily due to seasonal adjustments with the unadjusted print broadly in line with previous years. Nevertheless the market reacted to the strong headline number and GBP consequently rallied.
"Retail sales are not a direct input into GDP calculations and historically have been a relatively poor indicator of consumer spending. Furthermore, retail sales slowed to 0.4% q/q in Q4 from 1.5% in Q3; therefore it’s difficult to suggest this print poses upside risks to Q4 GDP.
