We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides Download
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Governor of California says 8400 people are being monitored for the coronavirus - BBG
  • US Treasury Yields: 2-Year: 1.113% 3-Year: 1.101% 5-Year: 1.112% 7-Year: 1.219% 10-Year: 1.304% 30-Year: 1.792% $TNX
  • We are cognisant of the fact that with month-end looming, given the outperformance in bonds over equities (US bonds outperforming S&P 500 by over 6%). Where is the market heading while #coronavirus continues to spark panic. Find out from @JMcQueenFX here:https://t.co/NZN1yuel13 https://t.co/n5GrdImX3B
  • US 7-Year Notes Draw 1.247% Primary Dealers Awarded: 23.9% Indirect Bidders Accepted: 63.0% Direct Bidders Accepted: 13.1% B/C Ratio: 2.49
  • some tech issues today so may be intermittent interruptions. but given vol the show must go on. webinar starts right now https://www.dailyfx.com/webinars/643096611
  • Right now at the White House @RampCapitalLLC https://t.co/LXGGmrXWvM
  • Fed's Evans: - Have more capacity for accommodation if necessary - Policy action change is premature until more data gathered - Monitoring impact from virus closely $DXY $SPX
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.07%, while traders in USD/CAD are at opposite extremes with 68.92%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/1ZBu6ad3CP
  • spoooz 90 handles off the lows... think this report his helping out https://t.co/CjF9SBeoN8 https://t.co/DPFlJGydyv
  • The #Dow Jones is sitting on the 200-day and June 2019 slope, a break through there might not extend to this point, but the next level of price support is near the 25,700/300-area.Get your #equities technical analysis from @PaulRobinsonFX here: https://t.co/VeB7yZTFAE https://t.co/JbwyWK7ngZ
Forex: British Pound Tumbles as U.K. GDP Disappoints in the Fourth Quarter, Euro Holds 1.37 For Now

Forex: British Pound Tumbles as U.K. GDP Disappoints in the Fourth Quarter, Euro Holds 1.37 For Now

2011-02-25 13:30:00
Michael Wright, Currency Analyst
Share:

Talking Points

  • Japanese Yen: Mixed Across the Board
  • British Pound: GDP Disappoints in the Fourth Quarter
  • Euro: Eyes 1.385 on Inflation Outlook
  • U.S. Dollar:U.S. GDP Report on Tap

The British pound extended yesterday’s losses against the greenback on the back of a disappointing economic activity report, leading the pair to break below its key support level of1.61, which coincides with the rising hourly trend line dating back to February 11th. Indeed, economic activity in Great Britain slipped 0.6 percent in the fourth quarter amid forecasts of a 0.5 percent contraction. At the same time, the annualized rate rose a mere 1.5 percent to mark the lowest reading since the three months ending in March 2010. Taking a look at the breakdown of the report, exports advanced 2.3 percent, while imports jumped 3.0 percent. Additionally, total business investment slumped 2.5 percent from the 3rd quarter.The data does not bode well for the region and makes policy increasingly difficult as inflation remains stubbornly above the central bank’s target. Furthermore, growth is expected to come under pressure in the coming months as the government implements its largest spending cuts since the Second World War.

Indeed, there were warning signs from Bank of England policy maker David Miles leading up to the GDP report as he said that the U.K.’s recovery is “fragile” and added that “we want to start bringing down inflation back down but if we decided interest rates were to go up, we need to know what impact this might have.” All in all, the British pound could witness additional selling pressure as currency traders rule out a rate hike at the central bank’s next meeting. Heading into next week’s trade, market participants will shift their focus to Nationwide house prices, PMI manufacturing, and the M4 money supply. As the economic outlook remains unclear, disappointing reports could add color to the bearish picture.

Meanwhile, the euro is also under pressure as risk aversion regains its footing, while the disappointing M3 money supply added weight onto the weakened currency. On an annualized basis, the reading rose 1.5 percent in January to post the slowest level of expansion since October, leading the EURUSD to test Support at 1.3780. This level is of critical importance and if price action holds, I do not rule out a test back towards 1.385. Going forward, Monday’s inflation report in the 17 member euro area will be placed in the spotlight as policy makers have been very hawkish as of late. A reading in line or exceeding forecasts could lead the euro towards the 1.39 area. On the other hand, a dismal report paired with the debt concerns in the bloc may hint at a key reversal point.

The dollar is mixed amongst its major counterparts ahead of the economic activity report in the world’s largest economy. Heading into the release, economists are forecasting GDP to rise 3.3 percent in the fourth quarter after climbing 3.2 percent the quarter prior. As the greenback regains its footing, a better than expected report could set the stage for further gains in the buck.

Will the EUR/USD Continue To Retrace The Advance From Earlier This Year? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

To discuss this report contact David Song, Currency Analyst: dsong@dailyfx.com

FX Upcoming

Currency

GMT

EST

Release

Expected

Prior

USD

13:30

08:30

GDP (Annualised) Q4

3.3%

3.2%

USD

13:30

08:30

Core Personal Consumption Expenditure (QoQ) Q4

0.4%

0.4%

USD

13:30

08:30

GDP Price Index Q4

0.3%

0.3%

USD

13:30

08:30

Personal Consumption Q4

4.2%

4.4%

USD

14:55

09:55

UMich Confidence FEB

75.4

75.1

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.