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Will the Pound Show a Slight Bullish Bias Today? (15/10/2024)The GBPUSD pair is expected to display a slight bullish bias today, 15/10/2024, based on the latest fundamental factors and market conditions. Traders and investors are closely watching the movements in the British pound against the U.S. dollar, as the market sentiment shifts amid key macroeconomic events. Here’s a breakdown of the key drivers supporting this outlook: 1. UK Economic Data: CPI Expectations The UK inflation report, which is set to be released later this week, is on the radar for traders. Early forecasts indicate that inflation may remain slightly elevated, reinforcing expectations that the Bank of England (BoE) will maintain its hawkish stance on interest rates. This anticipation tends to lend strength to the pound, as higher interest rates make a currency more attractive to investors seeking better yields. In recent months, the BoE has been steadfast in its approach to combating inflation, a stance that has provided support for the British pound, making GBPUSD sensitive to any inflation-related news. With inflation still a concern, a bullish bias for the pound can be justified, particularly in the lead-up to the CPI report. 2. US Dollar Softness: Lower Treasury Yields On the U.S. side, the U.S. dollar (USD) has seen some softness due to declining Treasury yields and mixed signals from the Federal Reserve regarding the future of interest rates. Last week’s economic data pointed to potential cooling in the U.S. labor market and lower inflationary pressures, which have reduced the market's expectations for further rate hikes in 2024. With the Federal Reserve signaling that it may be nearing the end of its aggressive rate hike cycle, the U.S. dollar’s recent rally has stalled, giving room for pairs like GBPUSD to gain traction. This contributes to the bullish bias in the pair for today. 3. UK Political Stability and Brexit Sentiment Another factor supporting the pound’s slight bullish stance is the current phase of relative political stability in the UK. After the volatile post-Brexit years, the UK government is focused on stabilizing the economy. Any developments or positive sentiment surrounding trade agreements with the EU or other major trading partners could further boost the pound's strength. Brexit-related concerns have been less dominant recently, which has helped reduce the uncertainty that previously weighed on the pound. If this political calm continues, the GBPUSD pair could benefit from increased investor confidence in the pound. 4. Technical Analysis: Support at 1.2150 From a technical analysis perspective, the GBPUSD has found solid support around the 1.2150 level, which has held strong in recent trading sessions. As long as this support remains intact, the pair has the potential to make upward moves. Additionally, momentum indicators such as the RSI are showing signs of recovery from oversold conditions, hinting at a potential short-term bullish reversal. If the pair manages to break above the 1.2200 resistance level, we could see further gains towards the next key resistance level of 1.2300. 5. Global Market Sentiment In the broader market context, risk sentiment is playing a significant role in driving currency movements. If global markets continue to show risk-on sentiment, with equity markets rising and risk assets in favor, the British pound could see additional support against the U.S. dollar. Given the factors of strong inflation expectations in the UK, a softer U.S. dollar, and a technical setup that supports higher prices, the GBPUSD may be positioned for slight bullish movement today. Conclusion In conclusion, today’s GBPUSD outlook points towards a slightly bullish bias . While the U.S. dollar continues to show signs of weakness amid lower Treasury yields and potential pauses in the Federal Reserve’s rate hikes, the British pound is drawing strength from expected higher inflation in the UK, the BoE’s hawkish stance, and a generally stable political environment. Traders should watch the upcoming inflation data and key resistance levels to confirm this bullish trend. Keywords for SEO: GBPUSD forecast, GBPUSD analysis, GBPUSD today, British Pound outlook, GBPUSD bullish, UK inflation report, Federal Reserve, GBPUSD technical analysis, Bank of England, Treasury yields, Brexit sentiment, Forex trading, GBPUSD trend 15/10/2024, GBPUSD prediction, Forex market news, currency trading
Long
by PERFECT_MFG
GBPUSD Analysis: Slightly Bullish Bias on 08/10/2024.In today's analysis of the GBPUSD pair, we anticipate a slightly bullish bias driven by a combination of fundamental and technical factors. As we move through the trading session on 08/10/2024, traders are closely monitoring key economic releases and geopolitical developments that are expected to influence market sentiment. Let’s explore the primary drivers behind this expected bullish movement. Key Fundamental Drivers 1. Hawkish Sentiment from the Bank of England (BoE) The recent comments from the Bank of England (BoE) officials have been hawkish, signaling that further rate hikes could be on the horizon to combat inflation. With UK inflation remaining above target levels, the BoE's focus on tightening monetary policy to bring it down is a key factor supporting the British Pound (GBP). The market is pricing in the possibility of at least one more rate hike in the near future, which adds upward pressure on GBPUSD. 2. US Dollar Weakness Amid Softening Data The US Dollar (USD) has been showing signs of weakness as recent economic data from the US indicates a slowdown in key sectors, particularly the labor market and consumer spending. The Non-Farm Payrolls report released last week missed expectations, leading to speculation that the Federal Reserve may pause rate hikes sooner than anticipated. This dovish sentiment surrounding the Fed provides a tailwind for GBPUSD, as a weaker USD makes the pair more attractive for buyers. 3. Political Stability in the UK Political stability in the UK, especially in comparison to the uncertainties in the US, has helped maintain investor confidence in the British Pound. The UK government’s recent fiscal policy announcements have been well-received by markets, with investors expecting that these measures will support economic growth, adding strength to GBP in the short term. 4. UK Economic Data Today’s release of the UK’s GDP data will be crucial in setting the tone for GBPUSD. Positive GDP growth figures are expected to fuel further optimism around the British economy, reinforcing the bullish momentum for the Pound. Additionally, the services sector PMI data coming in stronger than forecasted last week suggests that the UK economy is performing better than many of its European counterparts. Technical Outlook From a technical perspective, GBPUSD is trading above its 50-day moving average, which is a bullish signal. The pair is also hovering near a key support level of 1.2150, and as long as this level holds, we could see further upside potential. RSI indicators also suggest that the pair is not yet overbought, leaving room for additional gains throughout the trading day. Key Levels to Watch: - Support Level: 1.2150 - Resistance Level: 1.2275 A break above the 1.2275 resistance level could signal further upward momentum, pushing GBPUSD towards 1.2300 in the near term. Conclusion: Slightly Bullish Bias for GBPUSD In conclusion, based on today’s fundamental factors and market conditions, we anticipate a slightly bullish bias for GBPUSD. With hawkish sentiment from the BoE, weakening USD, and positive economic data from the UK, traders can expect the pair to inch higher as the day progresses. Keeping an eye on key levels and economic releases will be crucial for capturing potential trading opportunities. Keywords: GBPUSD, GBPUSD analysis, GBPUSD trading, GBPUSD forecast, Bank of England, GBPUSD bullish, UK inflation, US Dollar weakness, forex trading, GBPUSD technical analysis, GBPUSD support levels, GBPUSD resistance levels, GBPUSD 08/10/2024, GBPUSD outlook, forex trading ideas, forex strategy, forex market analysis, forex trader
Long
by PERFECT_MFG
GBPUSD Sets 2+ Year Highs as the Fed Out-Cuts its UK PeerThe pair gains nearly 5% this year and the latest round of policy decisions by the Fed and the BoE, sent it the highest levels since the first quarter of 2022. The US Fed on Wednesday made its belated pivot with an outsized 0.5% reduction and pointed to another 50 bps worth of cuts by the end of the year. The Bank of England started lowering rates earlier than its US counterpart, with the 0.25% cut of August. Still wary over price pressures though, it has maintained a cautious stance around further easing. This apprehension was reaffirmed on Thursday, as policymakers stood pat on rates. The Fed out-cut the BoE and is on track to deliver more reductions, setting up a favorable monetary policy differential for GBP/USD. Bulls now have the opportunity to push for the 1.3483 handle, but we are cautious at this time for further strength. The Fed may have pointed to steep rate cut path as it tries to ensure a strong labor market and a soft landing, but may have a hard time implementing it, as it could put upward pressure to prices. On the other hand, despite the BoE’s trepidation, pressure could mount for faster pace and two more cuts are not unreasonable. Furthermore, the RSI moves towards overbought conditions, so we could see pressure. Daily closes below the EMA200 (black line) would be needed for the bullish bias to pause, but that is hard to justify under current monetary policy dynamics. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”) (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 59% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
Short
by FXCM
Easy Does It: Bank of England Leaves Bank Rate on Hold at 5.0%‘Easy does it’ was today's primary message from the Bank of England (BoE). Unlike the US Federal Reserve cutting rates by an outsized 50 basis points (bps) yesterday, the BoE is clearly in no rush to ease policy, with most policymakers backing a slow and steady approach. In an 8-1 majority vote, the BoE left the Bank Rate on hold at 5.0% (external member Swati Dhingra, a known dove, opted for a 25bp cut). This follows August's meeting's 25 bp reduction, its first rate cut since 2020. The central bank also unanimously voted that the Committee would decrease its government bond purchases by £100 million over the next 12 months. Amid the hold and hawkish vote split, the rate announcement triggered a bid in sterling (GBP) versus major G10 currencies. GBP/USD refreshed year-to-date peaks just north of US$1.33, touching levels not seen since early 2022. BoE Governor Andrew Bailey emphasised that the economic picture is evolving as expected and rates would be reduced ‘gradually over time’, and added: ‘It's vital that inflation stays low, so we need to be careful not to cut too fast or by too much’. Headline Inflation Remains Just North of the BoE’s Target UK CPI inflation (Consumer Price Index) was unchanged in August for both YoY and MoM measures on the headline front. The Office for National Statistics revealed that UK headline inflation rose by +2.2% (YoY), flirting just north of the BoE’s inflation target of 2.0%, reached in May this year. Core and services inflation, however, ticked higher in August, with the latter still a thorn in the side of the BoE. It is worth noting that the rise in services inflation was largely due to base effects. Wages continued to pull back in the three months to July; the unemployment rate also dropped to 4.1% from 4.2% in June (BoE forecast unemployment will hit 4.8% in two years), and employment growth jumped to 265,000 from June’s reading of 97,000. Regarding growth, the BoE now forecasts real Gross Domestic Product (GDP) to ease to 0.3% in Q3 24, a touch south of the 0.4% August forecast. While the economy grew 0.5% in the three months to July 2024, albeit softer than the market’s median estimate of 0.6% and lower than June’s reading of 0.6%, real GDP flatlined again in July, defying economists’ expectations of 0.2%. Cautious Vibe The central bank’s cautious vibe has seen markets pare rate cut bets for this year. OIS traders (Overnight Index Swaps) are fully pricing in a 25bp rate cut in November, with a total of 43bps of cuts for the year. Where Does This Leave the GBP? The British pound versus the US dollar (GBP/USD) is in a favourable spot on the monthly chart. Following the break of resistance at US$1.3111 (now possible support), this technically swings the pendulum in favour of further upside for the currency pair, targeting resistance at US$1.3483. The trend also supports the bulls, exhibiting clear-cut uptrends on the monthly and daily charts, therefore any corrections will likely be viewed as dip-buying opportunities. Supports of interest are the monthly base mentioned above at US$1.3111, positioned near a local daily descending support line, extended from the high of 1.3267.
Long
by FPMarkets
EURGBP Bearish Bias Reaffirmed after UK CPI but BoE LoomsThe Bank of England lowered rates last month, for the first time in four years, joining major peers in their shift to less restrictive monetary settings. However, officials adopted a cautious and non-committal approach on further easing, as they remain wary of inflation which they expect to rise further this year. Today’s inflation report will likely strengthen the BoE’s apprehension, as CPI stayed above the 2% target, while core accelerated to 3.6% y/y in August. EURGPB faces pushback as a result, at the critical resistance cluster provided by the EMA200 (black line) and the 23.6% Fibonacci of the August fall. Bearish bias is intact below that level, sustaining risk for further losses towards and beyond 0.8381. The monetary policy differential is unfavorable for the pair, as the ECB has already slashed rates twice this year and at least one more cut is expected this year. The Bank of England will have a hard time moving again on Wednesday, but pressure for faster easing pace is likely to increase. Wage growth moderated substantially and this can allow greater tolerance for slower return of inflation to target, while the economy remains fragile, despite exiting its brief recession. EUR/GBP has contained its fall in recent weeks and a break above the aforementioned resistance cluster would pause the bearish bias and provide the launching pad for taking out the 38.2% Fibonacci. Greater recovery however towards the 61.8% levels looks hard under current policy dynamics. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 6 2% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”) (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 59% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
Short
by FXCM
England's Economic Crossroads and Banking ResilienceEngland’s economy is facing a complex array of challenges, driven by domestic social unrest, geopolitical tensions, and evolving labor dynamics. Recent riots, sparked by both marginalized Muslim communities and extreme right-wing groups, highlight deep-seated socio-economic issues. These tensions have been exacerbated by international events, such as the October 7, 2023, incident in Israel, which reverberated through England's Muslim community. In addition to these social and geopolitical pressures, the economic indicators present a mixed picture. Inflation, unemployment, and a housing crisis have strained the economy, while regional conflicts, such as the Middle East and Russia-Ukraine wars, pose further risks to energy prices, trade, and security. Amidst this backdrop, the Bank of England’s recent declaration that top UK lenders can be dismantled without taxpayer bailouts is a significant milestone. This statement reflects the progress made since the 2008 financial crisis in enhancing the resilience of the UK banking system through stricter capital requirements and resolvability assessments. However, emerging risks such as climate change, cyberattacks, and global financial interconnectedness require continuous vigilance and robust regulation. Inspiration and Challenge: As traders and investors, understanding the interplay between social dynamics, geopolitical tensions, and financial stability is crucial. England’s current economic state challenges us to think beyond traditional metrics and consider the broader implications of regional conflicts and social unrest on financial markets. The resilience of the UK banking system offers a glimmer of stability, but it also calls for ongoing scrutiny of emerging risks. Engage with this analysis to deepen your strategic insights and navigate the complexities of the global economic landscape.
FTSE:UKXShort
by signalmastermind
$GBINTRS - BoE's Snowball - The Bank of England (BOE) decided to deliver its #inflation medicine in a bigger dose at their recent monetary policy committee meeting. The bank made the shock decision to raise borrowing costs a half percentage point, taking the official rate to 5% ; double the size of the increase anticipated by most economists. BoE hiking interest rates to 5% , it adds further strain to millions of homeowners across the country. The Central Bank Rates was upped by 0.5% from 4.5% previously and remains at it's Highest Level since 2008 Financial Crisis.
ECONOMICS:GBINTR
by Mr_J__fx
UK100 Extends Consolidation on Murky Monetary Policy OutlookUK100 has pulled back following its May record peak and has entered consolidation mode, as uncertainty around BoE’s policy path has taken hold. Although policymakers have pointed to a less restrictive stance ahead, there is no clarity around the timing of a pivot. The last inflation print did not help, as market pared back bets for a cut in August, since CPI persisted at 2% and the services component remained sticky. This sustains risk for a breach of the pivotal 38.2% Fibonacci of this year’s rally, which would bring the 200Day EMA (blue line) in the spotlight, although deeper weakness does not look easy. The central bank has hinted at lower rates ahead, price pressures have moderated and the economy exited its brief recession. Furthermore, the new government could usher in a much needed period of stability, while the change in listing rules cam reinvigorate the IPO market and boost sentiment. UK100 has already defended the 38.2% Fibonacci multiple times, containing the correction to levels that reaffirm the upside potential. Bulls have the ability to reclaim 8,369 and eventually push for new all-time highs (8,488). Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”), previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
FX:UK100Long
by FXCM
GBP/USD Exchange Rate Rises Above 1.3000 on Inflation NewsGBP/USD Exchange Rate Rises Above 1.3000 on Inflation News As evidenced by the GBP/USD chart, yesterday the exchange rate rose above the psychological level of 1.3000 USD per pound for the first time in 12 months. The strengthening of the British currency occurred after the release of inflation news. According to ForexFactory: → Year-on-year Consumer Price Index (CPI): actual = 2.0%, forecast = 1.9%, previous = 2.0%; → Year-on-year Core CPI: actual = 3.5%, forecast = 3.4%, previous = 3.5%. Thus, analysts' expectations of a slowdown in inflation were not met, giving market participants a reason to believe that the Bank of England's tight policy would continue for a longer period, providing a bullish boost for the GBP. However, in the second half of yesterday, the bears managed to “extinguish” all the progress from the bullish momentum. A bearish engulfing pattern formed on the chart (shown with an arrow). Moreover, bearish activity intensified this morning after the release of labour market news. The number of jobless claims (Claimant Count Change) filed in the previous month was 32.3K, whereas analysts had expected 23.4K. This has clouded expectations regarding the future policy of the Bank of England – whether it will keep rates at the current high level of 5.25%, or start to reduce them. In any case, the pound exchange rate fell below the psychological level of 1.3000 today, raising the possibility of a false bullish breakout. What can the chart suggest about whether this scenario will actually play out? According to the technical analysis of GBP/USD: → The price is in an uptrend (shown by the blue channel); → After yesterday's bearish engulfing, the price is still in the upper half of the channel. The exhaustion of bullish sentiment seems appropriate in light of the rally from the July low of approximately 3%. If so, we may see weak rebounds (the bulls' inability to resume the rally) from the median line of the channel and its lower boundary. Key support appears to be the former resistance at the 1.294 level. If the GBP/USD rate can consolidate below this level, it will become relevant to look for patterns to build a descending channel. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
3
BoE Rate Decision: Pound's Fate Hangs in the Balance – Rally or With the Bank of England's (BoE) interest rate decision on the horizon, let's examine recent developments in GBPUSD, primarily through the lens of fundamental analysis. Chart analysis reveals that recent GBPUSD fluctuations have been largely influenced by the US dollar's strength, fueled by the Fed's increasingly hawkish stance. Although a September rate cut by the Fed is still widely anticipated, recent commentary and revised dot plot projections suggest a more cautious approach, bolstering the dollar's bullish momentum. US Dollar Strength: Not Just About Rate Cuts The US dollar's resilience, despite the expected rate cut, can be attributed to several factors. The September cut was already priced into the market, and the Fed's surprisingly hawkish tone has prompted a reassessment of the likelihood of further easing. Until clear signs of cooling inflation and a looser labor market emerge in the US, the dollar's upward trajectory is likely to persist. The CME FedWatch Tool, which forecasts rate movements based on fed funds futures trading data, currently shows a higher probability of a rate cut in September than before the recent CPI data release. This suggests that the market is still weighing the Fed's intentions carefully. UK Inflation on Target: A Dovish BoE Unlikely Yesterday's UK inflation data, which met the BoE's 2% target, might not lead to an immediate shift towards a dovish monetary policy. Market consensus anticipates a rate hold at 5.25% in today's BoE meeting (most analysts and economists predict the first rate cut to occur in August). However, the BoE's forward guidance will be critical. Hawkish commentary regarding inflation, robust wage growth, or a tight labor market could temporarily strengthen the pound. Short-Term & Mid-Term Outlook: A Bullish Pound Faces Headwinds In the short term, a hawkish BoE could potentially drive GBPUSD back towards the 1.28 level. However, a sustained bullish momentum is unlikely, with a mid-term target of 1.26 seeming more plausible. This is because even with a hawkish stance, the UK's inflation and labor market appear better positioned for easing compared to the US, suggesting the BoE may be forced to adopt a dovish stance sooner than the Fed.
by UnknownUnicorn13053793
ECB just cut... Is it BOE’s turn next week? The European Central Bank (ECB) initiated its cutting cycle last week on June 6. Expectations are that ECB policymakers are in no hurry to follow this first cut with a second one. Next week, we will see how much of a hurry the Bank of England (BOE) is to follow the ECB. A Reuters poll of 65 economists indicates the BOE is likely to wait until August to cut interest rates. The consensus had previously settled on a cut on June 20, so bear that in mind when taking their forecasts into account. UK inflation eased to 2.3% in April, close to the central bank's 2.0% target, from a peak of 11.1% in October 2022. So why wouldn't the BOE cut rates this month? Well, wage and services inflation, both watched closely by the BoE, are still around 6%. The question that arises is how much the BOE weighs inflation in this sub-section of the economy against overall inflation. On the GBP/USD chart, after reaching a three-month high, buyers were unable to keep the pair above 1,2800 to challenge the year-to-date (YTD) high of 1.2894. The next support level is possibly 1.2700.
by BlackBull_Markets
Strifor || GBPUSD-21/03/2024Preferred direction: BUY Comment: After the Fed meeting , the pound, like most majors, strengthened its position and in the near future, this trend is likely to continue. Of course, surprises from the Bank of England today cannot be ruled out, so the focus on the British currency today is the greatest. It is unlikely that the regulator will suddenly lower the rate, as the Swiss Central Bank did. For the current long-deal, we consider, as always, two scenarios . Volatility cannot be ruled out in any case, so one needs to open positions extremely conservatively, and it is best to gradually accumulate position (step-by-step). Scenario №2 , as one might guess, is a kind of "plan B" , and is intended to unexpected the Bank of England's maneuvers. The target at the level of 1.28000 is the closest potential obstacle for the buyer, so we set the current Take Profit there. But longer-term prospects still locate higher, around the 1.30000 level. Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
Long
by Viktor_strifor_analyst
1
GBPUSD Pressure Mounting On the Pound Hi Traders! A symmetrical triangle has formed on the GBPUSD 1D chart, and we could have a breakout soon as pressure is quickly mounting on the pound. Here are the details: The market has found support and resistance at both the trendline support and trendline resistance of the triangle, as the market is looking for a direction. Looking at the price action, it looks bearish due to the market swings; the lows and highs are starting to get lower, and additionally, the market has broken and closed above the 20 EMA. The fundamental news also supports our bearish view. Earlier today, the MPC Official Bank Rate Votes came out at 2-1-6 which was surprising and worse than expected. Traders will read this as uncertainty for the pound while the dollar continues to strengthen. As long as the market is still below the 20 EMA, our view will remain bearish. We expect some more consolidation before a possible third attempt at the trendline resistance. Preferred Direction: Sell Technical Indicators: 20 EMA Resistance: 1.27508 Support: 1.25965 Please make sure to click on the like/boost button 🚀 as your support greatly helps. Trade safely and responsibly. BluetonaFX
Short
by BluetonaFX
Interest Rates and Inflation: Shaping GBPUSD's TrajectoryGreetings Traders, As we delve into the intricacies of GBPUSD for potential trading opportunities, the convergence of fundamental factors takes center stage. This analysis encapsulates the interplay between interest rates, Consumer Price Index (CPI) data, and central bank decisions for both the Bank of England (BoE) and the Federal Reserve. Examining the BoE's CPI data provides insights into the inflationary pressures faced by the UK. The most recent CPI figures on December 20, 2023, indicate a year-over-year inflation rate of 3.9%, slightly below the forecasted 4.3% and notably lower than the previous 4.6%. The gradual decrease in inflation suggests a potential easing of price pressures. However, it's crucial to note that even with this decline, inflation remains elevated. In tandem with the CPI, the BoE's interest rate decisions are instrumental in understanding the monetary policy landscape. As of December 14, 2023, the BoE has maintained a benchmark interest rate of 5.25%. This consistent stance signals the central bank's commitment to addressing inflation while providing stability to the economy. The interest rate differential between the BoE and the Federal Reserve plays a pivotal role in shaping GBPUSD dynamics. Contrasting this with the Federal Reserve's interest rate decisions, the FOMC has maintained a steady interest rate of 2.00% as of December 13, 2023. The relatively lower interest rate in the United States compared to the UK creates an environment where traders need to carefully navigate the potential impact on GBPUSD. Analyzing the broader context, the comparative interest rates and inflation trends suggest a nuanced landscape for GBPUSD. While the BoE grapples with elevated inflation, its commitment to a higher interest rate provides a counterbalance. On the other hand, the Federal Reserve's dovish stance, despite rising inflation, signals a cautious approach. This divergence in monetary policy contributes to the potential for GBPUSD upsides. In conclusion, traders eyeing GBPUSD for a buying opportunity around the 1.25900 zone should consider the complex interplay of interest rates, inflation, and central bank decisions. The nuanced analysis presented here aims to equip traders with a comprehensive understanding of the macroeconomic factors shaping GBPUSD's prospects, pointing towards potential upsides in the current market environment. Wishing you successful trades, Joe.
Long
by JoeChampion
3
Post Bank of England Rate Decision AnalysisThe Bank of England (BoE) maintained a hawkish stance, keeping rates on hold at 5.25%, with votes kept at 3-0-6. With UK CPI reported at 4.6% in October 2023, the BoE views a longer-term fight to bring inflation back to its target range. The GBP gained strongly against the USD, with more upside potential as the BoE pushed back against the possibility of rate cuts. Technicals Price spiked up from 1.26 following the news, and is currently trading along the resistance area of 1.28 and 61.8% fib retracement level. Breaking the resistance level, the GBPUSD could trade up towards the next major resistance level and swing point from July 2023 at 1.3140
Long
by JinDao_Tai
BluetonaFX - GBPUSD Pullback To Previous Resistance BreakHi Traders! GBPUSD looks to be on a pullback after breaking and closing above the previous resistance, and there are opportunities for short entries to take advantage of the potential pullback to target levels near the previous resistance break. Price Action 📊 After the initial break and close above the previous resistance at 1.24286, the market rallied to find new resistance near the swing high resistance level near 1.27466. If the market holds here, the pattern will become a double-top pattern, which is bearish, so this will also support our view. Our plan here is to sell rallies and look for exits near the previous resistance break at 1.24286 and the 20 EMA. Fundamental Analysis 📰 Later today, we have BoE Governor Bailey speaking; therefore, we must be wary of his speech, as what he says may be potentially volatile for GBP pairs. Support 📉 1.26068: PREVIOUS DAY'S LOW 1.24286: PREVIOUS RESISTANCE BREAK Resistance 📈 1.27466: SWING HIGH RESISTANCE Risk ⚠️ No more than 2% of your capital. Reward 💰 At least 4% of your capital. Please make sure to click on the like/boost button 🚀 as your support greatly helps. Trade safely and responsibly. BluetonaFX
Short
by BluetonaFX
2
Markets embrace the Higher-for-Longer themeIt has been a big week of central bank policy announcements. While central banks in the US, UK, Switzerland, and Japan left key policy rates unchanged, the trajectory ahead remains vastly different. These central bank announcements were accompanied by a significant upward breakout in bond yields. Interestingly most of the increase in yields has been driven by higher real yields rather than breakeven inflation signifying a tightening of conditions. The bond markets appear to be acknowledging that until recession hits, yields are likely to keep rising. Connecting the dots The current stance of monetary policy continues to remain restrictive. The Fed’s dot plot, which the US central bank uses to signal its outlook for the path of interest rates, shows the median year-end projection for the federal funds rate at 5.6%. The dot plot of rate projections shows policymakers (12 of the 19 policymakers) still foresee one more rate hike this year. Furthermore, the 2024 and 2025 rate projections notched up by 50Bps, a signal the Fed expects rates to stay higher for longer. The key surprise was the upgrade in growth and unemployment projections beyond 2023, suggesting a more optimistic outlook on the economy. The Fed’s caution is justified amidst the prevailing headwinds – higher oil prices, the resumption of student loan payments, the United Auto Workers strike, and a potential government shutdown. Quantitative tightening continues on autopilot, with the Fed continuing to shrink its balance sheet by $95 billion per month. Risk assets such as equities, credit struggled this week as US yields continued to grind higher. The correction in risk assets remains supportive for the US dollar. A hawkish pause by the Bank of England In sharp contrast to the US, economic data has weakened across the board in the UK, with the exception of wage growth. The weakness in labour markets is likely to feed through into lower wages as discussed here. After 14 straights rate hikes, the weaker economic backdrop in the UK coupled with falling inflation influenced the Bank of England’s (BOE) decision to keep rates on hold at 5.25%. The Monetary Policy Committee (MPC) was keen to stress that interest rates are likely to stay at current levels for an extended period and only if there was evidence of persistent inflation pressures would further tightening in policy be required. By the next meeting in November, we expect economic conditions to move in the MPC’s favour and wage growth to have eased materially. As inflation declines, the rise in real interest rates is likely to drag the economy lower without the MPC having to raise interest rates further. That said, the MPC is unlikely to start cutting rates until this time next year and even then, we only expect to see a gradual decline in rates. Bank of Japan maintains a dovish stance Having just tweaked Yield Curve Control (YCC) at its prior Monetary Policy Meeting (MPM) on 28 July, the Bank of Japan decided to keep its ultra easy monetary settings unchanged. The BOJ expects inflation to decelerate and said core inflation has been around 3% owing to pass-through price increases. Governor Ueda confirmed that only if inflation accompanied by the wages goal was in sight would the BOJ consider an end to YCC and a rate shift. With its loose monetary policy, the BOJ has been an outlier among major central banks like the Fed, ECB and BOE which have all been hiking interest rates. That policy divergence has been a key driver of the yen’s weakness. While headline inflation in Japan has been declining, core inflation has remained persistently higher. The BOJ meeting confirmed that there is still some time before the BOJ exits from negative interest rate policy which is likely to keep the Yen under pressure. The developments in US Monetary Policy feeding into a stronger US dollar are also likely to exert further downside pressure on the Yen. This year global investors have taken note that Japanese stocks are benefitting from the weaker Yen, relatively cheaper valuations and a long-waited return of inflation. Japanese companies are also becoming more receptive to corporate reform and shareholder engagement. Adopting a hedged Japanese exposure Taking a hedged exposure to dividend paying Japanese equities would be a prudent approach amidst the weaker yen. This goes to a point we often make - currency changes do not need to impact your foreign return, and you can target that local market return by hedging your currency risk. A hedged Japanese dividend paying equity exposure could enable an investor to hedge their exposure to the Yen. This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
Editors' picks
TVC:US10Y
by aneekaguptaWTE
1
EURAUD bullish on dovish RBA Bullish EUR/AUD on Dovish RBA Monetary Policy Reunion The Reserve Bank of Australia (RBA) held its latest monetary policy meeting on October 3, 2023, and decided to keep the official cash rate (OCR) at 4.10%. This was widely seen as a dovish move, as markets had been expecting a 25 basis point rate hike. The RBA's decision was likely influenced by a number of factors, including the recent slowdown in the Australian economy, the ongoing war in Ukraine, and the risk of a global recession. In its statement, the RBA noted that "inflation is higher than expected in Australia and globally, and is expected to remain high for some time". However, the RBA also said that "growth in the Australian economy is expected to slow in the coming months, and the unemployment rate is expected to rise". The RBA's dovish stance is likely to be positive for the EUR/AUD currency pair. A lower OCR in Australia is likely to make the Australian dollar less attractive to investors, while a higher OCR in Europe is likely to make the euro more attractive. In addition to the RBA's monetary policy decision, there are a number of other factors that are currently supporting the EUR/AUD currency pair. These include: The ongoing war in Ukraine, which is weighing on the global economy and boosting demand for safe-haven currencies such as the euro. The risk of a global recession, which is also boosting demand for safe-haven currencies. The European Central Bank (ECB) is expected to start raising interest rates in the near future, which would further support the euro. Technical Analysis From a technical perspective, the EUR/AUD currency pair is currently trading above a key trendline. This suggests that the pair is in an uptrend and is likely to continue to move higher in the near future. The next key target for the EUR/AUD currency pair is the 1.70 level. If the pair can break above this level, it could then move towards the 1.75 level. Conclusion The EUR/AUD currency pair is currently in a bullish trend and is likely to continue to move higher in the near future. This is supported by the RBA's dovish monetary policy stance, the ongoing war in Ukraine, the risk of a global recession, and the ECB's hawkish stance. From a technical perspective, the EUR/AUD currency pair is currently trading above a key trendline. The next key target for the pair is the 1.70 level. If the pair can break above this level, it could then move towards the 1.75 level. Trade Idea Buy EUR/AUD above 1.66 with a target of 1.70 and a stop loss below 1.6356. Risk Warning Trading foreign exchange (forex) is a risky activity and can result in substantial losses. Please ensure that you understand the risks involved before trading forex.
Long
by masterclass618
1
Virulent inflation raises pressure on the Bank of EnglandThe inflation battle is far from over in the UK. In fact, the nature of inflation is taking a new form as the root cause moves away from external to more domestically driven shocks. While the headline rate remained unchanged at 8.7%yoy in May, core inflation accelerated to 7.1% in May from 6.8% in April, marking the highest rate since March of 19922. In response the Bank of England (BOE) raised interest rates by a bumper 50Bps to a 15-year high. While the Federal Reserve (Fed) and the European Central Bank (ECB) have made progress on bringing down inflation, the BOE still has some ways to go. Current market pricing assumes the terminal policy rate will go to 6% by year end3. UK inflation proving to be virulent The UK has the most severe entrenched inflation problem across developed markets. The domestically driven increase of services prices advanced from 6.9% to 7.4%yoy in May4. As services are labour intensive, they are being impacted by strong wage gains. Employment growth has been stronger than projected underscoring continued robust demand for labour. This high demand caused the rise in weekly average earnings (ex-bonus) to 7.5% in April5, well above the BOE’s forecast. Brexit has been partly responsible for the rise in wages. Brexit reduced the mobility of European workers. The resulting lack of non-qualified workers has not yet been reabsorbed. The situation was clearly exacerbated during the Covid pandemic that left a large part of the workforce sick. The shortage of workers in the UK continues to weigh on the supply side and has been the key reason inflation has remained stubbornly high. The resilient gains in employment (up 1.2% in April 20236) have allowed UK households to continue spending on services. Thereby contributing to higher services inflation, prices for recreational and cultural goods and services rose by 6.8%yoy in May 20237. At the same time, due to the shift away from floating rate mortgages towards fixed rate products over the last decade, the pass through of higher rates is taking longer to feed through the economy, thereby enabling the consumer to appear more resilient. However, headwinds are appearing from higher mortgage rates, with at least 800,000 fixed mortgages due to move on to significantly higher rates in H2 20238. Rents have also been rising, at an annualised pace of 5.6% in May compared to 3.2% in 20229. This is likely to place further pressure on real disposable incomes and simultaneously fuel core inflation higher. The Institute for Fiscal Studies estimates that higher interest rates will cause the average mortgage holder to suffer an 8.3% fall in disposable income compared to a scenario where rates remained at March 2022 levels. For 1.4 million of those borrowers, disposable income will fall by more than 20%10. BOE guided dovish The BOE’s guidance implied that no further rate hikes should be needed bar evidence of more persistent inflationary pressures however the market ignored this. Money markets priced a terminal rate of 6.25% by February 202411. The BoE did not rule out further rate increases should the inflation data continue to be unfavourable. However, they did downplay the unexpected surge in core inflation in May owing to special contributing factors such as the sharp rise in vehicle excise duty and the erratic contribution of airfares and holiday packages. The BOE also highlighted that forward looking indicators are pointing to material falls in future wage inflation which could then lower the pressure on services prices. We share that view, as producer price inflation which tends to serve as a leading indicator for consumer price inflation, eased more than expected in May. The June composite Purchasing Managers Indices (PMI) dropped for a second month in June, showing price pressures easing across the board, suggesting the economy could be turning. Sterling Positive rate surprises are not always positive for the currency. The Pounds muted response (-0.17%)12 to the BOE meeting despite the hawkish surprise and its negative reaction (-0.21%)13 to the hawkish May inflation data suggest that the BOE is prepared to endure a deeper slowdown in order to bring inflation under control. As a growth sensitive currency this is likely to remain an important headwind for the Pound. Sources 1 Bloomberg as of 23 June 2023 2 Bank of England as of 22 June 2023 3 Bloomberg, as of 23 June 2023 4 Bank of England as of 21 June 2023 5 Office for National Statistics as of 31 May 2023 6 Office for National Statistics as of 31 May 2023 7 Bank of England as of 22 June 2023 8 Source: Bank of England, Bloomberg as of 22 June 2023 9 Office for National Statistics, as of 22 June 2023 10 Institute for Fiscal Studies as of 30 April 2023 11 Bloomberg as of 23 June 2023 12 Bloomberg GBP/USD as on 22 June 2023 13 Bloomberg GBP/USD as on 20 June 2023
ECONOMICS:GBINTR
by aneekaguptaWTE
Daily Market Analysis - TUESDAY JUNE 20, 2023Investors Await Central Bank Actions Amid Global Economic Concerns and Uncertainties Prevail Today events: USA - Building Permits (May) USA - FOMC Member Bullard Speaks USA - Housing Starts (MoM) (May) USA - FOMC Member Williams Speaks Eurozone - ECB McCaul Speaks Eurozone - ECB's De Guindos Speaks On the evening of Monday, following a public holiday, there was a slight decline in stock futures as investors braced themselves for significant speeches expected from officials of the Federal Reserve (Fed) and members of the Federal Open Market Committee (FOMC) throughout the week. This anticipation added to the prevailing uncertainties and lack of clarity that characterized the previous week. In the United States, the inflation data was considered acceptable but not extraordinary, prompting the Fed to temporarily halt its actions while projecting multiple interest rate hikes in the future. In contrast, the European Central Bank (ECB) raised interest rates and emphasized the potential for further increases. Now, all eyes are on the Bank of England (BoE) as it confronts the formidable task of managing the current situation. Despite the efforts of the Monetary Policy Committee (MPC) to maintain control, there exists a looming risk of inflation spiraling out of hand. Among the major economies grappling with the dual objectives of taming inflation and ensuring a smooth economic transition, the United Kingdom appears to be encountering the greatest challenges in effectively attaining these goals. GBP/USD daily chart An intriguing observation can be made regarding the GBP/USD currency pair. Despite retracing from its recent peak around $1.28, the pair has still managed to register a notable 3% gain over the past month. Notably, the British pound has also exhibited strength against the euro, appreciating by more than 1.6% during the same period. This is particularly noteworthy when considering the past situation in September, where the pound was nearing parity with the dollar as UK Gilt yields surged. Presently, it is trading close to the $1.30 mark. This suggests that the foreign exchange market does not currently reflect a prevailing perception of an imminent economic disaster for the UK. In the realm of EUR/USD, Tuesday presents challenges for the currency pair to gain significant momentum. It remains confined within a narrow trading range, with the pair hovering just above the 1.0900 level during the Asian session. US Dollar Currency Index daily chart Following its recent decline, the US Dollar (USD) is currently in a phase of recovery. Last Friday, it reached a low that had not been witnessed in over a month. However, the USD has been displaying a gradual strengthening trend for the past three consecutive days. This resurgence of the USD poses a challenge for the EUR/USD currency pair, causing it to retreat to the latest level of 102.55. EUR/USD daily chart However, despite the prevailing challenges, the downside for the EUR/USD pair seems to find some support, at least temporarily, thanks to the hawkish stance adopted by the European Central Bank (ECB). The ECB's optimistic outlook serves as a factor that mitigates the potential decline of the pair. Furthermore, the current subdued sentiment in equity markets works in favor of the US Dollar's role as a safe-haven currency. This situation, in turn, limits the upside potential for the EUR/USD pair. Concerns regarding a potential global economic slowdown, particularly in China, cast a shadow over reports of China contemplating a comprehensive stimulus package to bolster its economy. These worries continue to dampen investor sentiment. Even the recent decision by the People's Bank of China to lower the one-year and five-year Loan Prime Rates (LPRs) on Tuesday fails to alleviate anxieties or provide significant momentum to the major currency pair. It is noteworthy that the ECB has recently raised interest rates for the eighth consecutive time, propelling them to the highest level witnessed in 22 years. The central bank has also emphasized the necessity of further rate hikes to attain the Eurozone's medium-term inflation target of 2%. XAU/USD daily chart In contrast, gold has undergone substantial volatility in the preceding month. Despite the dissemination of recent data and central bank determinations, this precious metal has remained confined within a narrow price range of $1,940 to $1,980, demonstrating minimal signs of breaking out in either direction in the immediate future. Nevertheless, it is important to recognize that market conditions can swiftly shift. The current week is particularly eventful, as it is characterized by a flurry of central bank interest rate decisions and a multitude of speeches by Federal Reserve officials. These upcoming events have the potential to introduce new dynamics and variables into the financial markets.
by FOREXN1
11
GBP/USD steady, BoE's Mann has warning about core inflationThe British pound continues to rally and is up for a fourth straight day. BoE member Mann said on Wednesday that the Bank of England will have a difficult time setting monetary policy due to inflation. The US releases the Core PCE Price Index, a key inflation measure, on Friday. In the European session, GBP/USD is trading at 1.2346, up 0.23%. The pound is poised to record a fourth-straight winning week and has jumped 2.69% in March. The Bank of England has its hands full with high inflation, with no peak in sight. The BoE was not pleased to see inflation accelerate in February to 10.4%, up from 10.1% prior. BoE member Catherine Mann had a sobering message on Wednesday, saying that the drop in energy prices would lower headline inflation, but core inflation was trending higher, which would make it difficult for the BoE to set monetary policy during the year. The BoE's target of 2% is based on headline inflation, but the core rate, which removes the more volatile components in the headline figure, is considered a better gauge of inflation. Governor Bailey weighed in on inflation earlier this week, saying that the "path of inflation would not be entirely smooth" but that he expected inflation to fall sharply in the summer. The banking crisis may prove to be a blessing in disguise for the BoE if it dampens economic activity and lowers inflation, which the BoE has not been able to contain despite raising rates to 4.25%. The banking crisis has eased somewhat, with no further contagion in the banking system since the collapse of several US banks and Credit Suisse. The markets are waiting for the Core PCE Price Index on Friday. This is the Fed's preferred inflation indicator and it could provide clues about the Fed's future rate path. The Fed meets next on May 3rd and the markets have priced in a 61% chance of a pause in hikes, with a 39% chance of a 25-basis point increase. GBP/USD continues to test resistance at 1.2329. The next resistance line is 1.2425 There is support at 1.2248 and 1.2152
by OANDA