News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
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
Gold
Bearish
GBP/USD
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
USD/JPY
Bullish
More View more
Real Time News
  • RT @tracyalloway: Aaaand r/wallstreetbets just went private https://t.co/wAudxFdqfl
  • Not only was today the worst day for the #SP500 in almost 3 months (-2.57%) But also, the #VIX market 'fear-gauge' surged 61.64% That was the largest single-day surge since February 2018 which means.... Yes, worse than any single instance during last year's Covid crash https://t.co/u2laobD913
  • 🇯🇵 Retail Sales YoY (DEC) Actual: -0.3% Expected: -0.4% Previous: 0.7% https://www.dailyfx.com/economic-calendar#2021-01-27
  • 🇯🇵 Foreign Bond Investment (23/JAN) Actual: ¥752.6B Previous: ¥272.4B https://www.dailyfx.com/economic-calendar#2021-01-27
  • Heads Up:🇨🇭 World Economic Forum Annual Meeting due at 00:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-01-28
  • US equities tumbled overnight. All 11 S&P 500 sectors declined, with only 15% of the index’s constituents closing in the green on Wed. Communication services (-3.82%), consumer discretionary (-3.13%) and healthcare (-3.05%) were among the hardest hit. https://t.co/wGR3JBguZg
  • Heads Up:🇯🇵 Retail Sales YoY (DEC) due at 23:50 GMT (15min) Expected: -0.4% Previous: 0.7% https://www.dailyfx.com/economic-calendar#2021-01-27
  • Heads Up:🇯🇵 Foreign Bond Investment (23/JAN) due at 23:50 GMT (15min) Previous: ¥272.4B https://www.dailyfx.com/economic-calendar#2021-01-27
  • Will the Swiss Franc find reprieve after recent losses against the Canadian and New Zealand Dollars as NZD/CHF and CAD/CHF uptrends face key chart barriers? Find out from @FxWestwater here:https://t.co/c89gcaNhTt https://t.co/aWbG3XGCXt
  • USD broadly stronger during early trade $USD $EUR $JPY $CHF $CAD $AUD https://t.co/DlvOYzrVVU
British Pound Could Rally, but Rate Environment Increasingly Negative

British Pound Could Rally, but Rate Environment Increasingly Negative

Christopher Vecchio, CFA, Senior Strategist
British_Pound_Could_Rally_but_Rate_Environment_Increasingly_Negative_body_Picture_5.png, British Pound Could Rally, but Rate Environment Increasingly NegativeBritish_Pound_Could_Rally_but_Rate_Environment_Increasingly_Negative_body_Picture_6.png, British Pound Could Rally, but Rate Environment Increasingly Negative

Fundamental Forecast for British Pound: Bearish

The British Pound was the worst performing major currency on the week, falling 0.8 percent against the U.S. Dollar while faring worse against the commodity currencies, the Australian, Canadian, and New Zealand Dollars. Part of the Sterling’s underperformance this week was tied to the negative sentiment revolving around the Euro, which was the second worst performer this week. Still, regardless of the situation evolving in Europe – we’re now in a slow, steady decline rather than the rapid plunge in the second half of 2011 – the British economy is a disaster.

Data the past week wasn’t kind to the British Pound, and the week ahead offers little reason to be bullish on the currency from a fundamental perspective; a retracement by the U.S. Dollar or significant Euro strength will be necessary going forward to support the Sterling. Two pieces of data in the coming period stick out that should be watched that will shape future price action by the Sterling in the long-term.

First, on Tuesday, inflation data is due for the month of December. The consumer price index, on a year-over-year basis, is forecasted to fall to a 4.2 percent rate, down from 4.8 percent in November. This is certainly a welcomed development for the British economy, which has been stagflating for over a year now (stagflation is a growth environment characterized by low growth, high inflation, and high unemployment). With the inflation rate expected to remain more than twice the Bank of England’s target of 2 percent, the economy remains in trouble, and measures need to be taken to help contain price pressures.

Unfortunately, in hand with the high rate of inflation, the other two characteristics of a stagflating economy – low growth and high unemployment – still exist. On Thursday, labor market data is due, and the unemployment rate is expected to remain elevated at 8.3 percent. Measures set forth by the government to reel in the country’s massive debt burden have weighed on the economy, forcing many out of work as companies trim costs amid a rising tax rate environment; austerity and growth rarely go hand in hand (just ask Greece).

In light of all this, it’s clear the Bank of England is in a quandary. They’ve indicated that a decreasing inflation environment in the future should give them more room to stimulate growth, and that is expected to alleviate the downtrodden labor market in the coming weeks, even though little substantive evidence exists to support the notion that quantitative easing supports the labor market. With expectations rising that the Bank of England will unleash another round of quantitative easing in the coming months (they did not at their policy meeting on January 12), short-term interest rates will be depressed. Historically, when central banks expand the monetary supply to support growth, the domestic currency loses value relative to other currencies. In this case, with the British economy stagflating and data due this week supportive of that belief, any further easing will weigh on the Pound. –CV

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

DISCLOSURES