GBPUSD news - page 117
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GBP/USD Extends Correction Ahead of May/Trump Meeting
GBP/USD established a new rally high immediately following the release of better-than-expected UK fourth quarter GDP on Thursday, reaching 1.2673. However, sellers quickly stepped and the pair has remained in selloff-mode since. GBP/USD is currently trading at 1.2532, a loss of 0.46% from Thursday’s North American close.
However, the recent pullback is thus far minimal relative to the advance from the January 16 low and the pair is still set to post a strong weekly gain. GBP/USD became heavily overbought as a result of the rally following the January 16 tumble, having gained more than 5% in under two weeks from the January low. Thus, a period of correction appears warranted.
At present, GBP/USD is testing the 23.6% Fibonacci retracement of the rally from the January 16 low to this week’s rally high. On a break below this level, the next target becomes the 38.2% retracement, which stands at the 1.2405 level and is in the same vicinity as the low established January 24, as well as the pair’s 50-day moving average.
This level is currently expected to hold given the bullish developments that have taken place as a result of the recent advance. Specifically, the pair broke out to the upside of a falling trend channel shown on the daily chart and moved above the 61.8% retracement level of the December 6-January 16 decline. Despite the current setback, the current target is at the December 6 high at 1.2775, which is in the same vicinity as the upside target derived from the recent breakout from the falling trend channel shown on the daily chart.
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Potential May + Trump Deal "Could be Wildly Positive for Sterling" Against Euro and Dollar
There are potential currency implications of Theresa May’s much-anticipated meeting with Donald Trump on Friday, January 27.
All eyes are on the UK Prime Minister as she meets the newly-installed US President in his first official set-piece with a foreign leader.
Having endured a strong second-half to January the British Pound’s ascent has since stalled - could moves here reignite the rally?
Those wanting a stronger Pound will be hoping that some upside impetus can be restarted by May’s visit and it is likely any such assistance will be provided by signs that the US is open to negotiating an improved trade deal with post-Brexit Britain.
“Sterling is still poised for stronger gains especially as Prime Minister May embarks on her trip to Washington. In contrast to the twitter spat with Mexico, the U.K. and U.S. should enjoy a stronger relationship given President Trump's support for Brexit,” says Kathy Lien, Managing Director at BK Asset Management.
Lien says she would not be surprised if May walked away with a promise for a healthy bilateral trade deal.
“If the two leaders were to talk of progress on this front, it could be wildly positive for Sterling,” says Lien.
If the US becomes one of the first countries to announce a bilateral trade deal with Britain, Lien says it would be a vote of confidence for Brexit and force other countries to fall in line.
Will it shield the U.K. economy from slower growth or recession?
“No, but it will be years before the UK formally exits from the EU and that is when they will feel the brunt of the pain. For the time being, the weaker currency and a friendlier relationship with the US should continue to support the economy,” says Lien.
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The Pound To Dollar 5-Day Forecast - 'Bearish Prognosis In The Short Run' Say Scotiabank
Although the pound to dollar exchange rate rallied from lows of 1.204 on Monday 16th January to a best of 1.2633 on Wednesday 25th, the pair ended last week softer at the 1.2548 level.
Scotiabank's Shaun Osborne notes "weakness below short-term trend support (now resistance) at 1.2600/05 supports the bearish prognosis for the GBP in the short run."
"We spot initial retracement support derived from the mid-Jan rally at 1.2510 but feel that corrective risks may extend back to the 1.24 area for the pound in the next 1-2 weeks."
GBP USD Exchange Rate Unsettled by Brexit Bill News
Last week was a busy one in terms of UK political and economic developments, although this hive of activity ultimately failed to result in lasting gains for the GBP USD exchange rate.
Political news focused on the Supreme Court verdict on Article 50, which ruled against the Government and led to Parliament needing to approve a bill before the Government could trigger Article 50.
This news concerned some exchange rate investors, who saw the court’s snubbing of the devolved nations in the bill vote process as a prelude to another Scottish independence referendum.
Domestic data included Q4 GDP, which reprinted for the preliminary figures instead of falling as expected.
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Correction in GBP/USD Remains Underway
GBP/USD is lower in today’s trading, holding near 1.2520, down 0.18% from Friday’s close. However, the pair continues to hold the 23.6% Fibonacci retracement of the advance from the January 16 low to last week’s high. Thus, recent weakness in the pair has been minimal relative to the advance, keeping the overall bias in GBP/USD to the upside.
With recent selling thus far only moderate, it appears as though GBP/USD is merely reacting to the extreme overbought condition that resulted from the strong advance from the January 16 low, a move that lifted the pair more than 5% over a span of less than two weeks.
With the Stochastic still overbought and moving lower, further weakness could characterize price action throughout today’s trading. On a breakdown below the 23.6% retracement at 1.2505, the next level of support is defined by the 38.2% retracement of the recent advance near the potentially psychologically important 1.2400 level, which is reinforced by both the January 24 low and the pair’s 50-day moving average. At present, this level is expected to hold, given the broader bullish outlook for the pair. As a result, a move to this level appears best used as a buying opportunity.
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UK data - GfK Consumer Confidence (January): -5 (expected -8)
UK - GfK Consumer Confidence for January
GBP: Biggest 2-Week Rise In Almost 2 Years: What's Next? - NAB
The British Pound has just enjoyed its best two-week performance since April 2015, with January 17th seeing the biggest one-day rally against the US Dollar in almost 8 years.
This hasn’t been driven by uniformly strong economic data: whilst GDP growth in Q4 at 0.6% q/q was a tenth better than consensus estimates, retail sales in December showed the biggest m/m drop in nearly 5 years and the number of people in work is now lower than 3 months ago.
Instead, a combination of short investor positioning and changing political dynamics has given a huge and unexpected boost to the GBP.
The key question is the extent to which this good political news is now already in the price of the pound? The sharp rally in GBP/USD reflects some disappointment with the USD as much as a less bleak near-term outlook for the GBP and, with the better growth and monetary policy outlook in the United States, we expect the USD to now gradually begin to find more investor support.
The December 2016 high of GBP/USD 1.2775 should provide formidable technical resistance to the recent rally and though the Bank of England on Thursday may try to talk tougher on inflation, no-one seriously expects a rate hike at any point over the next 12 months.
As attention now turns to what is officially referred to as the European Union (Notification of Withdrawal) Act 2017, we believe that notwithstanding the improved political backdrop the GBP will struggle to extend its recent gains. A 3% gain on a trade-weighted basis in the space of just 10 trading days is a quite sufficient repricing of the balance of risks.
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UK Nationwide January HPI mm +0.2% vs 0.0% expected
UK Nationwide January House Price Index 1 Feb