GBPUSD news - page 115
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UK - BRC like-for-like sales for December: +1.0% y/y (prior +0.6%)
Data from the British Retail Consortium
Comments from BRC chief executive Helen Dickinson on the data:
GBP: Market Not Re-Engaged In Selling But Short Remains Actionable
The UK's High Court decision on November 3 took some pressure off the British Pound. But Prime Minister May's speech on Sunday (8 Jan), which simply restated her plan to trigger Article 50 by March and leave the EU within two years, has been sufficient to pull the currency down to the October lows.
Cable moved from 1.229 on Friday's close to 1.216 today. This is a testament to how vulnerable the Pound is to the repricing of a ‘hard Brexit’ scenario, as well as, in our view, the extent to which periods of Sterling strength are the result of markets not discounting the new reality appropriately, a reality that we have fully incorporated into our outlook for the currency since the referendum in June and that we have reiterated several times since.
The FX market has not yet re-engaged with selling Sterling. Net shorts have been reduced (Exhibit 2) and GBP has been one of the few G10 currencies not to depreciate substantially against the Dollar since the US elections.
But, in our view, Sterling is ‘actionable’ and soon set to become even more ‘unfashionable’, despite the recent move lower, as coming political events will only increase uncertainty on the future relationship between the UK and the EU. The Supreme Court is due to rule in favour of the High Court Decision on the need for a Parliamentary vote to trigger Article 50 by the end of the month. In response, the government will need to prepare a bill for the vote to take place before the end of March. This preparatory work, together with a subsequent parliamentary vote in favour of triggering Article 50, is likely to increase uncertainty even further. The kind of deal the EU and the UK will agree on will remain unclear for some time, with the UK government sticking to PM May's 'red lines' (immigration control and backing away from the European Court of Justice's jurisdiction) and the EU refusing to grant the UK participation in the Single Market under these demands. We expect the main economic consequences to be twofold: (i) an economic slowdown owing to elevated political uncertainty that reduces investment, employment and consumption as a result of higher prices, and (ii) an adjustment to the UK's external balance requiring a substantial decline in the current account deficit.
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UK ministers see the government losing the Supreme Court case
Headline coming from the UK paper The Guardian
Full story from the Guardian here.
GBP/USD Erases Gains, Drops into Negative Territory
GBP/USD has come under selling pressure and is now well off the session high, trading near 1.2208, down 0.01%. Earlier today, the pair was trading at 1.2258, a gain of 0.41%, after reaching as high as 1.2317.
It has been reported that British Prime Minister May will make a speech next Tuesday on her approach to Brexit to promote global Britain. This news may have sent some jitters through the market.
On the downside, support is at the zone defined by the 1.21 level and the October 7th flash crash low at 1.1950. This zone was tested with Wednesday’s low.
Despite the recent bounce due to dollar weakness, the bias in GBP/USD remains to the downside, given the ongoing market angst surrounding a hard Brexit.
On the upside, resistance is at the January 5/6 highs at the 1.2432 level. At present, this level is expected to remain intact given today’s failed rally attempt.
The Bank of England have release their Q4 credit conditions report
It's no real surprise to see investment falling with Brexit hanging over the UK like a storm cloud.
GBP/USD forecast for the week of January 16, 2017
During the past week, the British pound initially started off by a selling off drastically. We reach towards the 1.20 level, which has been massive support as of late, and then bounced enough to form a hammer. The hammer is a very bullish sign, and thus I suspect that the buyers are going to be getting involved. However, this is going to be a very choppy market going forward, as we could be looking at a potential trend change. If that’s the case, expect a lot of volatility and don’t get involved unless of course you can deal with quite a bit of volatility. A break above the top of the hammer is a sign that the buyers are getting involved, and a break above the 1.2750 level sends this market much higher. The 1.20 level is a major level in this pair, so if we break down below their things change drastically.
However, I believe that the British pound selling off is only going to be a temporary thing. When I look at a multi-year chart, there is a massive floor at the 1.15 handle as well as the 1.20 level, so I think it’s only a matter of time before value investors get involved. The Federal Reserve is looking to raise interest rates true enough, but the question remains whether they can. Trend changes are very volatile and nasty looking things, and that’s probably which are going to see in this pair. There was a point where the swap alone would be reason enough to hang onto this type of trade but unfortunately most retail shops are going to pay you either know swap, or a slightly negative one.
However, I think if you are a longer-term player you can take a shot on the street, but you must be able to deal with a significant drop if we do break down below the 1.20 level. This is a multitier trade waiting to happen, but I don’t know quite yet if were ready. There are a couple signs on this chart though, one of which is the MACD picking up some positivity at the same time we have formed what could be a “double bottom.” I’m keeping my eyes open, and putting a small long position on.
British Pound Plunges to Fresh Lows as May Signals Diamond-Hard-Brexit
The Pound was smacked down to a new multi-year lows against the Dollar and other major currencies as Pacific markets opened on Monday 16 January.
The decline was expected.
This weekend we were met with reports from the Sunday Times that Theresa May will make the right to control UK immigration a red line in upcoming Brexit negotiations.
This clashes with the EU's own red line that free movement of labour is a prerequisite for membership to the EU's single market - and the question of single market access granted to the UK following Brexit is what is driving the Pound at present.
According to a report, the UK government's red lines will be an end to free movement from the EU and the right to hold bilateral trade talks with other countries, which it is thought will not be achievable while still in the single market.
Markets now have certainty - the UK is leaving the EU's single market.
While the Prime Minister is intending to attempt to make a positive persuasive case for the UK leaving a spokesman suggesting that "we are expecting a market correction" underlines the presumption within government of the currency trading fresh lows this week.
"When May encouraged GBP negativity back in October she failed to recognise or attempt to mitigate the impact of the slide, expect much the same this time, indeed expect an attempt to make a virtue of the move via benefits to the export sector," says Jeremy Stretch at CIBC Macro Strategy in London.
The job for currency markets now is to find the right price for Sterling to reflect the move.
"Early indications suggest single market access is unlikely to be retained - a headline which could send GBP sharply lower," says Viraj Patel at ING in London.
"Hard-Brexit fears plus weaker UK data points to a test of the 1.20 level. Range next week: 1.1840-1.2320, 1 month target: 1.15," says Patel.
Patel wrote this prior to the admission that the UK would be setting red lines on migration; they may have to recalibrate.
For analyst David Bloom at HSBC we are now in what can be defined as “diamond-hard-Brexit” - one in which the UK would completely sever all links with the continent, including the common market, the EU budget and free movement of labour.,
HSBC say GBP/USD would likely trade at 1.10 on this diamond-hard-Brexit scenario.
The sooner we reach this level then the sooner the recovery can begin.
Note though that downing Street has described the suggestion that the UK is looking to pull out of the single market as "speculation" with a source telling Sky News: "The issue of the single market and the customs union will be answered on Tuesday when the Prime Minister sets out her negotiations."
GBP/USD Surges in Reaction to May Speech
Sterling is on track for its best day since the financial crisis in reaction to the Brexit speech delivered today by British Prime Minister Theresa May. The pair is currently trading near 1.2330, up nearly 2.4%.
Britain will leave the EU single market and the Prime Minister promised a parliamentary vote on Britain’s deal to leave the European Union and said it would seek to stay a key European partner. May also stated that she is confident that a positive agreement can be reached with the EU and that she does not want to undermine the single market or the European Union.
GBP/USD is now above the $1.2300 level and appears on track for a retest of the high established January 5th at 1.2432, as the pair has broken solidly above the 61.8% retracement level of the decline from that high to Monday’s reaction low.
The steep trajectory of today’s rally has left little in the way of clear support on the chart should sellers step back in due to the pair’s now extreme overbought condition on both a daily and intraday basis. Minor potential support stands at the 1.2117 level, followed by 1.2085.
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GBP/USD Faces Profit-Taking Following Tuesday’s Explosive Advance
Sterling is subject to profit-taking in today’s session following Tuesday’s gain of about 3%, the largest one-day gain since at least 1998. GBP/USD breached the 1.2400 level, with a move to 1.2416 for a high, which represents a test of the corrective top established January 5/6 as well as a test of the pair’s 50-day moving average. In today’s trading, the pair has backed off from Tuesday’s high and is trading at the 1.2309 level, down 0.85% from Tuesday’s North American close.
Sterling was higher in yesterday’s trading ahead of U.K. CPI data and the rally was boosted by the stronger-than-expected numbers. UK consumer prices rose 0.5% in December with the year-over-year rate increasing to 1.6% from 1.2% previously. This was better than estimates for a rate of 1.4% and represents the highest annual inflation rate since July 2014. The core inflation rate also increased to 1.6% from 1.4% compared with forecasts of an unchanged reading at 1.4% The RPI inflation rate came in at 2.5%, up from 2.2% previously.
The advance in GBP/USD then accelerated further as British Prime Minister Theresa May gave her highly anticipated Brexit strategy speech. May confirmed that she planned to take Britain out of the European Union’s single market, but included promises to let parliament have a say on the Brexit deal. May also stated that she is confident that a positive agreement can be reached with the EU and that she does not want to undermine the single market or the European Union.
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UK data: RICS House Price balance (December): 24% (expected 30%)
House prices on the up in the UK still, but at a, slower rate the previous month.