Get started

Poundsterling

JPY - FUNDAMENTAL DRIVERSFundamental bias: Bearish 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor, especially in the current. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global synchronized economic recovery and reflation environment. Of course, there remains many uncertainties and many countries are continuing to fight virus waves but as a whole the outlook has kept on improving over the past couple of months, which would expect safehaven demand to diminish, resulting in a weak bearish fundamental outlook. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials as it affects carry trade dynamics. Like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow dependent on the type of market environment from a risk and cycle point of view. From the start of the year, (as the bias for US10Y started to tilt higher) the inverse correlation has been exceptionally strong over the past couple of weeks and moves in the US10Y continue to dominate JPY price action. As long as the med-term bias for US10Y remains titled higher, that should put additionally downside pressure on the JPY. Month-end flows was the main culprit to blame for the big jolt higher in the JPY at the end of May as Citi bank noted that Japanese investors are expected to sell the JPY in order to hedge against foreign bonds. With month-end flows out of the way, we expect US Yields once again to be the main driver for the JPY in the weeks ahead which means key economic data that influences bonds will be important to watch for the JPY apart from the overall risk tone.
by thunderpips
2
GBP - FUNDAMENTAL DRIVERSFundamental bias: Strong bullish 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. The market showed their predisposition after the strong reaction from BOE’s Vlieghe this past week after he noted that there is a likelihood for earlier hikes in the cash rate if the economy progresses in line with their estimates. The comments were very conditional and also came from a member who is leaving in August, but the hawkish reaction from the market shows their inclination that the BOE is the next in line for a hawkish tilt. 3. The country’s economic developments The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP. Due to the continued improvement in economic data as the reopening accelerates, we have updated out Fundamental bias for Sterling from Bullish to Strong Bullish. It is true though that a lot of the positive surrounding the UK’s economic recovery should already be reflected in the price, but as long as the data continues to surprise to the upside the trend should be supportive for the GBP as it should provide further support for policy normalization from the BOE.
by thunderpips
GBP/AUD short IdeaFundamental side of the idea : The AUD by contrast is currently pressured alongside falling Iron prices. If these prices keep falling then AUD will face weakness. The Australian economy exports large amounts of Iron ore, so its price impacts the AUD. On The Other side we are seeing Inflation climbing faster , and Metals are making new High , and that should serve and make AUD strong again . Ultimately, the pound remains sensitive to the trajectory of UK inflation and the Bank of England’s monetary policy. UK inflation jumped to 1.5% in April from 0.7% in the prior month, though remains well below the BoE’s 2% target. There is certainly plenty of scope for the BoE to substantially tighten monetary policy should it view inflation as a threat, a development that could be significantly bullish for the pound. But we still Far away from that . Technical side of the idea : According to the technical analysis of the pair: So far, despite the weakness of the upward Trend , i am seeing a significant weakness on GBP , starting from forming a continuation pattern , to not breaking above some Fib Levels that were critical . P.S : The weak US dollar provides some reason to be Bullish on the Australian Dollar . Thank you . Do Not hesitate to Contact me For any kind of Quist . S.Sadki
Short
by SaraSadki
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: STRONG BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP. Due to the continued improvement in economic data as the reopening accelerates, we have updated out Fundamental bias for Sterling from Bullish to Strong Bullish. It is true though that a lot of the positive surrounding the UK’s economic recovery should already be reflected in the price, but as long as the data continues to surprise to the upside the trend should be supportive for the GBP as it should provide further support for policy normalization from the BOE.
by thunderpips
Gbp/Usd : Inevitable stop loss cluster hunt 1.4400 handle ?Gbp/Usd is trading inside the Strong Rectangular range since the Brexit, lacking essential catalysts for an upside breakout/Central bank keep intervening it to support the economy. On daily TF, price is approaching the strong resistance around 1.4200 and likely to make 150-200 pips high to clear the cluster of stop losses / Speculative Sentiment Index is around 30% on an average. Having said that, it is not that easy for the price to break upside range invincibly without any strong economical or geopolitical catalyst. Hence we are expecting a phase 1 retracement towards the 23.6% fib around 1.3560 once the above mentioned stop loss cluster of 1.4400 handle is cleared. Daily Trend : Up Major Trend : Range Signal : Sell Limit @ 1.42xx-1.4400 Stop Loss : 1.45xx Target : 1.3560
by UnknownUnicorn13514545
GBP - FUNDAMENTAL DRIVERSFundamental bias: Bullish 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
GBP/USD: IDEAHere is an analysis on the GBP/USD GU is currently trading @ 1.41200 Our expectations on the pair have now turned bearish We have bearish harmonics on both the 4H & 1D chart But GU is still currently bullish as you can see it is still trading within the current trend line If GU breaks above 1.41500 we'd expect it to hit 1.42 before falling back to 1.40, then 1.39 creating a perfect selling opportunity for us. It would be advantageous to place Sell Limit entries @ that level On the other hand if the pair breaks below its current trendline & treats 1.41 as resistance then we would expect it to fall further to 1.40, 1.39 Do note that there still is a bearish harmonic present on the 1M chart. link to previous analysis below
by fxspott
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
BOE – What to expect – Bank of AmericaBank of America discussed its expectations for this week’s BoE meeting in a recent note to clients, arguing that risks are tilted to the upside. Bank of America explains: We expect the BoE to endorse market expectations of two rate hikes by end-2024 in this week’s monetary policy report… We look for the BoE to taper QE purchases at next week’s policy meeting. If not this week, then June. The risks of a more hawkish BoE should be supportive for GBP, but much of the heavy-lifting on UK rates was done through 1 Q. That the BoE could announce Asset Purchase Facility (APF) tapering should not come as a total surprise given its stated objective to extend purchases through to end-2021. How the BoE views the outlook beyond the expected sugar rush and its implications for the rate profile is arguably more significant for the pound.
by thunderpips
6
Chart of the day: Rates markets are pricing...Rates markets are pricing in faster policy normalization for the BOE With the Bank of England just a few days away, it’s always a good idea to reflect on the rates market and see what it’s pricing in. Looking at the SONIA quarterly futures rates we can see that markets are pricing in much faster policy normalization for the UK compared to the likes of the FED. SONIA futures are pricing in a first hike from the BOE by SEP 2022 (compared to March 2023 for the FED), and a total of 3 hikes (assuming 10bsp each) by March 2023. How does this information help us? It is helpful as it shows us a bit of a disconnect between the recent weaker price action, we’ve seen in sterling versus what the rates markets are implying for policy normalization. Thus, even though a lot of policy normalization expectations are baked into the rates market, the same is not reflected in sterling’s price action just yet. For now, consensus is not expecting the BOE to follow, the BOC’s lead by tapering asset purchases. But arguably the bigger focus will fall on the BOE’s rate hike projections.
CME:SONZ2021
by thunderpips
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips