British Pound (GBP) on 23/01: Sterling Forecasts, Predictions and In-Depth Analysis from Pound Sterling Live
- Last Updated: 03 April 2014
Updated: The GBP exchange rate complex has come under pressure once 
more at the start of April with the entire Markit PMI series missing the mark. However, many analysts continue to consider the latest price action as being representative of consolidative price action.
April will be pivotal for the UK unit - can the uptrend reassert itself or will we continue to see more of the same?
Keep in touch with our Live Coverage Here. For the archived material for the day in question please scroll through please scroll down.
By Gary Howes
LIVE Exchange Rates - Updated Automatically
BE AWARE: All the above exchange rate quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.
16:56: No surprises by Carney
BoE Governor today told the BBC, predictably, that there was no immediate need to raise interest rates, and that decisions over the its unemployment threshold were a matter for the Monetary Policy Committee.
With regards to the Bank of England and policy we believe that there will be little market moving developments until the February Inflation Report. Until then we expect BoE members to tow the line that no rate rises are imminent.
16:51: From sterling strength to euro strength
KBC Markets on the turns of fortune in EUR/GBP:
"Intraday, EUR/GBP traded in the 0.8170/80 area in Asia and at the onset of the European trading session. So, yesterday’s lows were still within striking distance.
"Yesterday, the UK labour market report was the trigger for the sell‐off in EUR/GBP. Today, the focus turned to the euro side of the story. Strong EMU PMI’s triggered a short‐squeeze in the euro and EUR/GBP didn’t escape this trend. EUR/GBP rebound to the 0.8225 area, but the 0.8225 previous support did is job as new resistance. The UK data (CBI distributive trades) were no issue for sterling trading this time.
"The picture in cable was quite different. The rebound in EUR/USD also had some side‐effects on cable. Sterling even touched a minor new correction top against the dollar north of 1.66. Overall dollar weakness played a role, too."
"Intraday, EUR/GBP traded in the 0.8170/80 area in Asia and at the onset of the European trading session. So, yesterday’s lows were still within striking distance.
"Yesterday, the UK labour market report was the trigger for the sell‐off in EUR/GBP. Today, the focus turned to the euro side of the story. Strong EMU PMI’s triggered a short‐squeeze in the euro and EUR/GBP didn’t escape this trend. EUR/GBP rebound to the 0.8225 area, but the 0.8225 previous support did is job as new resistance. The UK data (CBI distributive trades) were no issue for sterling trading this time.
"The picture in cable was quite different. The rebound in EUR/USD also had some side‐effects on cable. Sterling even touched a minor new correction top against the dollar north of 1.66. Overall dollar weakness played a role, too."
15:36: US dollar being sold off in aggressive manner
Global markets are in selling mood on Thursday afternoon, and this is hitting the US dollar hard.
Kathy Lien at BK Asset Management says:
"With the Dow Jones Industrial Average falling more than 100 points at the open, currencies are on the move. Interestingly enough, the dollar is not benefitting from any safe haven flows. Instead, the greenback is trading lower against all of the major currencies
"Despite better than expected economic data, the buck is down 1% versus the Swiss Franc and more than 0.8% versus the euro and Japanese Yen. The trigger is U.S. yields. Ten year bond yields have fallen 6bp this to 2.8% its lowest level in 6 weeks. This move drove USD/JPY below 104, putting the currency on track to test 103.
"These second tier economic reports do not indicate that the U.S. economy is in trouble but with the Federal Reserve meeting next week, these reports give investors a stronger reason to believe that the central bank could take a break from reducing asset purchases this month."
Kathy Lien at BK Asset Management says:
"With the Dow Jones Industrial Average falling more than 100 points at the open, currencies are on the move. Interestingly enough, the dollar is not benefitting from any safe haven flows. Instead, the greenback is trading lower against all of the major currencies
"Despite better than expected economic data, the buck is down 1% versus the Swiss Franc and more than 0.8% versus the euro and Japanese Yen. The trigger is U.S. yields. Ten year bond yields have fallen 6bp this to 2.8% its lowest level in 6 weeks. This move drove USD/JPY below 104, putting the currency on track to test 103.
"These second tier economic reports do not indicate that the U.S. economy is in trouble but with the Federal Reserve meeting next week, these reports give investors a stronger reason to believe that the central bank could take a break from reducing asset purchases this month."
15:08: TD Securities anticipate strong close to the week for GBP/CAD, 1.9 possible
The turkey shoot that is the GBP/CAD continues to deliver. Shaun Osborne at TD Securities is targeting 1.9:
"GBPCAD remains very well supported. The consolidation between 1.8050/1.7830 over the past week or so looks like a small bull wedge pattern but the implications are for a 700 tick rally from the 1.8050 level, possibly very quickly. Note that 1.8171 is the 38.2% retracement of the huge GBP depreciation (2.35/1.48) seen between 2007/2010."
A weekly close above targets 1.9201 (50% retracement point). A strong close to the week looks very, very likely at this stage so consider the 1.8750/1.92 range as the next bull target zone.
"GBPCAD remains very well supported. The consolidation between 1.8050/1.7830 over the past week or so looks like a small bull wedge pattern but the implications are for a 700 tick rally from the 1.8050 level, possibly very quickly. Note that 1.8171 is the 38.2% retracement of the huge GBP depreciation (2.35/1.48) seen between 2007/2010."
A weekly close above targets 1.9201 (50% retracement point). A strong close to the week looks very, very likely at this stage so consider the 1.8750/1.92 range as the next bull target zone.
14:05: It's all about wage growth when it comes to interest rate hikes
"Come February when the Quarterly Inflation Report is released, the central bank will have a difficult decision to make - do they advance their unemployment rate forecasts, lower their unemployment rate threshold to 6.5% or both? The key lies in wage growth. Average earnings growth slowed in December, providing the central bank with the flexibility to wait. As long as wage growth is lagging behind inflation, the Bank of England won't be hard pressed to tightened monetary policy." - Kathy Lien at BK Asset Management.
13:23: Bank of England's Paul Fisher Speaks, Credibility of Forward Guidance Dies a Little More
The Bank of England's Paul Fisher has spoken to markets today and confirmed the Bank of England would keep interest rates low for a while yet:
"Even if the 7% unemployment rate threshold were to be reached in the near future, I see no immediate need for a tightening of policy. The MPC has been clear all along, that upon reaching the 7% threshold we will have to consider what the medium-term pressures on the economy are and make an appropriate judgement about the direction and pace of policy, and any further guidance that we may choose to issue in future."
Forward Guidance was introduced as a policy to do exactly what it says on the tin provide guidance on rates with unemployment hitting 7% being absolutely key to the whole policy.
Now the Bank is throwing this promise away. Can markets ever trust them again?
"Even if the 7% unemployment rate threshold were to be reached in the near future, I see no immediate need for a tightening of policy. The MPC has been clear all along, that upon reaching the 7% threshold we will have to consider what the medium-term pressures on the economy are and make an appropriate judgement about the direction and pace of policy, and any further guidance that we may choose to issue in future."
Forward Guidance was introduced as a policy to do exactly what it says on the tin provide guidance on rates with unemployment hitting 7% being absolutely key to the whole policy.
Now the Bank is throwing this promise away. Can markets ever trust them again?
13:03: New ascending wave for GBP/USD?
The boffins at RoboForex have quite a complex view on where the GBP/USD could be headed next:
"Pound is still moving inside ascending wave. We think, today price may return to level of 1.6475 and then start new ascending movement towards level of 1.6680. Alternative scenario implies that pair may form another descending structure to reach level of 1.6260.
12:19: Long-term rise ahead for GBP?
Analyst Luc Luyet at MIG Bank says a longer-term ascent in the pound dollar exchange rate could be possible, but this is dependent on a key resistance level being breached:
"GBP/USD rose sharply yesterday and is now close to the key resistance at 1.6603. Another resistance lies at 1.6747 (28/04/2011 high). The short-term bullish momentum remains strong as long as the initial support at 1.6557 (intraday low) holds. Another support stands at 1.6451 (22/01/2014 low).
"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 1.6305 (25/12/2013 high) would negate this positive outlook. Another key resistance lies at 1.6747 (28/04/2011 high)."
"GBP/USD rose sharply yesterday and is now close to the key resistance at 1.6603. Another resistance lies at 1.6747 (28/04/2011 high). The short-term bullish momentum remains strong as long as the initial support at 1.6557 (intraday low) holds. Another support stands at 1.6451 (22/01/2014 low).
"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 1.6305 (25/12/2013 high) would negate this positive outlook. Another key resistance lies at 1.6747 (28/04/2011 high)."
12:01: UBS bullish GBP/USD
UBS offer a bullish forecast on the pound to US dollar:
"The recent sharp advance reinforces the bullish picture. Resistance focus is at 1.6622, a break above which would open 1.6747. Support is at 1.6400."
"The recent sharp advance reinforces the bullish picture. Resistance focus is at 1.6622, a break above which would open 1.6747. Support is at 1.6400."
11:57: GBP/USD needs to see a breach above 1.66
Emmanuel Ng at OCBC Bank gives his predictions for the GBP/USD:
"With the better than expected set of labor market numbers under its wings, the GBP-USD surfaced above 1.6500 and closed above 1.6550. Noteworthy also were the BOE MPC minutes, which layered on an additional buffer of optimism for the pound.
"Going ahead, investors are expected to continue to dwell on the BOE’s forward guidance, with tension better expectations for an earlier than expected rate hikes and the fact that the BOE has indicated that the unemployment rate trigger is not automatic. In the near term, the backdrop for the pair may be looking slightly more constructive pending a sustained breach above 1.6600."
"With the better than expected set of labor market numbers under its wings, the GBP-USD surfaced above 1.6500 and closed above 1.6550. Noteworthy also were the BOE MPC minutes, which layered on an additional buffer of optimism for the pound.
"Going ahead, investors are expected to continue to dwell on the BOE’s forward guidance, with tension better expectations for an earlier than expected rate hikes and the fact that the BOE has indicated that the unemployment rate trigger is not automatic. In the near term, the backdrop for the pair may be looking slightly more constructive pending a sustained breach above 1.6600."
11:07: Euro in strong comeback thanks to improving Eurozone data
Driving the euro higher against the euro today is a set of good data releases out of the Eurozone.
The flash PMI readings from both Germany and France showed an improvement with the exception of slight miss of German PMI services report. France which has been a horrid laggard and a drag on Eurozone growth finally saw an uptick in activity.
"Although both PMI remained below the key 50 reading, French Manufacturing PMI rose to 48.8 from 47.6 the month prior while Services increased to 48.6 from 48.2. Sentiment may have improved after President Hollande changed his rhetoric this month to assume a more business friendly posture," says Boris Schlossberg at BK Asset Management.
Meanwhile in Germany private business conditions rose to a 31 month high as PMI Manufacturing hit 56.3 versus 54.7 eyed while services registered a reading of 53.6.
"The strong man of Europe continues to massively outperform the rest of the region and is carrying the EUR/USD on it shoulders as the pair rose to within a few points of the key 1.3650 level in response to the positive data," notes Schlossberg.
The flash PMI readings from both Germany and France showed an improvement with the exception of slight miss of German PMI services report. France which has been a horrid laggard and a drag on Eurozone growth finally saw an uptick in activity.
"Although both PMI remained below the key 50 reading, French Manufacturing PMI rose to 48.8 from 47.6 the month prior while Services increased to 48.6 from 48.2. Sentiment may have improved after President Hollande changed his rhetoric this month to assume a more business friendly posture," says Boris Schlossberg at BK Asset Management.
Meanwhile in Germany private business conditions rose to a 31 month high as PMI Manufacturing hit 56.3 versus 54.7 eyed while services registered a reading of 53.6.
"The strong man of Europe continues to massively outperform the rest of the region and is carrying the EUR/USD on it shoulders as the pair rose to within a few points of the key 1.3650 level in response to the positive data," notes Schlossberg.
10:47: Forecasts for the British pound to euro exchange rate
For those looking out for pound euro exchange rate forecasts the latest views of Danske Bank are a must-read.
We look to add to this pro-Britsh pound theme with a few shorter-term forecasts.
We hear from Piet Lammens at KBC Markets who say yesterday's break above 1.2158 improves the technical picture of GBP/EUR further.
In case of a correction, KBC pullbacks as an opportunity to buy.
A technical forecast issued by MIG Bank also notes that the pound to euro exchange rate has broken resistance at 1.2158.
Resistance to further upmoves can be found at 1.2255 (a retracement level) and 1.2373.
The short-term technical configuration is positive as long as prices remain above the hourly support at 1.21 (20/01/2014 low). Another support lies at 1.2068.
We look to add to this pro-Britsh pound theme with a few shorter-term forecasts.
We hear from Piet Lammens at KBC Markets who say yesterday's break above 1.2158 improves the technical picture of GBP/EUR further.
In case of a correction, KBC pullbacks as an opportunity to buy.
A technical forecast issued by MIG Bank also notes that the pound to euro exchange rate has broken resistance at 1.2158.
Resistance to further upmoves can be found at 1.2255 (a retracement level) and 1.2373.
The short-term technical configuration is positive as long as prices remain above the hourly support at 1.21 (20/01/2014 low). Another support lies at 1.2068.
09:48: Citi see a UK rate hike in late 2014
Analysts at Citigroup are bullish on Sterling owing to their view that a rate hike will come in Q4 2014 whereas consensus appears to be for a hike to come in Q1 2015. Such a view is bullish for the British pound:
"Citi analysts anticipate that U.K. unemployment rate may fall to 6.4% in Q4 2014 and U.K. GDP may grow by 3.3% this year. Therefore, the Bank of England may raise rates earlier in Q4 2014. This will likely be GBP-positive. Technically, GBP/USD may test higher to 1.6618-1.6747, with support at 1.6381."
"Citi analysts anticipate that U.K. unemployment rate may fall to 6.4% in Q4 2014 and U.K. GDP may grow by 3.3% this year. Therefore, the Bank of England may raise rates earlier in Q4 2014. This will likely be GBP-positive. Technically, GBP/USD may test higher to 1.6618-1.6747, with support at 1.6381."
08:50: GBP trends higher, EUR recovers though
Forecasts form Ipek Ozkardeskaya at Swissquote Research:
"EUR/GBP advanced to 0.81683 – slightly above our 0.8160 target. GBP-complex consolidates gains on good UK jobs data released yesterday. GBP/USD advanced to 1.6587 and the buying interest is stronger. We expect GBP/USD to test the year high of 1.6603. The trend and momentum indicators are steeped in the bull market, and will favour the upside above 1.6450/60 (MACD pivot / 21-dma)."
"EUR/GBP advanced to 0.81683 – slightly above our 0.8160 target. GBP-complex consolidates gains on good UK jobs data released yesterday. GBP/USD advanced to 1.6587 and the buying interest is stronger. We expect GBP/USD to test the year high of 1.6603. The trend and momentum indicators are steeped in the bull market, and will favour the upside above 1.6450/60 (MACD pivot / 21-dma)."
08:15: GBP/USD tipped to break recent highs - today's Lloyds forecast
Lloyds Bank Research forecast for the British pound sterling suggests the possibility of further gains in GBP/USD:
"While the MPC will still no doubt be at pains to emphasise that 7% unemployment is a threshold rather than a trigger, their admission that there was less spare capacity than they previously thought was enough for the market to bring the expectation of the first rate hike into Q1 2015. GBP 2 year spreads against the USD haven’t quite reached the highs of late last year, but have risen enough to suggest a good chance of a break above the 1.6603 high seen at the beginning of the month.
"The MPC’s Fisher is speaking this morning, and can be expected to try and play down the scope for higher rates, but we would see any dip in GBP he manages to induce as a buying opportunity. EUR/GBP support around 0.8160 also looks likely to come under further pressure."
"While the MPC will still no doubt be at pains to emphasise that 7% unemployment is a threshold rather than a trigger, their admission that there was less spare capacity than they previously thought was enough for the market to bring the expectation of the first rate hike into Q1 2015. GBP 2 year spreads against the USD haven’t quite reached the highs of late last year, but have risen enough to suggest a good chance of a break above the 1.6603 high seen at the beginning of the month.
"The MPC’s Fisher is speaking this morning, and can be expected to try and play down the scope for higher rates, but we would see any dip in GBP he manages to induce as a buying opportunity. EUR/GBP support around 0.8160 also looks likely to come under further pressure."
08:09: GBP/CAD uptrend remains strong
Impressive gains against the Canadian dollar continue, the currency predictions from one prominent trader suggest it would be unwise to bet against sterling at this stage.
Sean Lee at FXWW says:
"Big mover overnight with classic scissors move, GBP going up and CAD going down; Cross is undoubtedly overstretched but I would not recommend shorting the GBP at the moment, the trend is too strong."
Sean Lee at FXWW says:
"Big mover overnight with classic scissors move, GBP going up and CAD going down; Cross is undoubtedly overstretched but I would not recommend shorting the GBP at the moment, the trend is too strong."
08:04: EUR/GBP sitting at key levels, time to book profits?
The euro is one currency that has rejected the pound sterling over the past few hours.
Sean Lee at FXWW notes there is a chance traders would look to book profits on this pair:
"Sitting on base of recent bearish trend channel. This suggests that the market is somewhat oversold (but that bear trend remains in play); I would not recommend going long against this trend until a daily low forms at channel lows, existing shorts can certainly consider booking some profits near current levels at 0.8170."
Sean Lee at FXWW notes there is a chance traders would look to book profits on this pair:
"Sitting on base of recent bearish trend channel. This suggests that the market is somewhat oversold (but that bear trend remains in play); I would not recommend going long against this trend until a daily low forms at channel lows, existing shorts can certainly consider booking some profits near current levels at 0.8170."
08:00: British pound (GBP) strength lingers
Why is the British pound sterling (GBP) still so firm in the global FX markets? It is all down to strong data and expectations of an early interest rate hike at the Bank of England:
"Sterling rose to three-week and one-year highs against the dollar and euro, respectively, after one of the largest declines in U.K. unemployment in nearly five years bolstered expectations for an early rate rise. Britain’s jobless rate eased to 7.1% in the three months to November, the lowest since the first quarter of 2009." - Joe Manimbo, Senior Market Analyst at Western Union.
"Sterling rose to three-week and one-year highs against the dollar and euro, respectively, after one of the largest declines in U.K. unemployment in nearly five years bolstered expectations for an early rate rise. Britain’s jobless rate eased to 7.1% in the three months to November, the lowest since the first quarter of 2009." - Joe Manimbo, Senior Market Analyst at Western Union.
07:55: Pound Sterling Live's Daily Coverage, Predictions and Forecasts for the British pound
Welcome today's live coverage. There are no major data events ahead today, however we will continue to update with the latest technical forecasts as well as keep an eye on those members of the Bank of England MPC who are speaking today. We predict the possibility of a pull-back in GBP, but overall the UK currency should be firm.
