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. See our updated Privacy Policy here.

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
More View more
Real Time News
  • GBP/USD has flattened overnight after its strongest rally in a month on Thursday. The British currency has been under pressure recently as an energy crisis has caused a number of gas providers to go bankrupt. Get your market update from @HathornSabin here:https://t.co/3D8s2eIVWv https://t.co/JDGNwKYyOn
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sIauS https://t.co/JIT5it2HAt
  • Gold could suffer further near-term losses due to rising U.S. Treasury yields and a weak technical picture for price action. Get your weekly gold forecast from @DColmanFX here: https://t.co/g9QvH3L4It https://t.co/Vz98E0Bl9U
  • Gold has been trending lower after failing to clear resistance in the $1835 area earlier this month. Get your $XAUUSD market update from @DColmanFX here:https://t.co/3hm1g3BHgf https://t.co/MdTQKEBCBx
  • Key break here in the 10-year #Treasury yield as it rises to the highest since late June Took out 1.4230 resistance, and the 100-day SMA Eyes now on the 38.2% Fib extension at 1.4775 Also potential falling resistance from March https://t.co/4cI6l210ui
  • The move in rates after this week’s FOMC has continued and the 10 year yield has pushed up to a fresh two-month-high. Get your market update from @JStanleyFX here:https://t.co/CRWhuZ3sxD https://t.co/svHHqN2Zz8
  • S&P 500 contending with its proverbial ‘line in the sand’ as bulls and bears battle for directional control. How we close/trade around the 50-day moving average could serve as a noteworthy bellwether for risk trends headed into next week. I remain cautious below ~4,480. $SPX $ES https://t.co/qogkjs1Sx2
  • USD/JPY trades to a fresh monthly (110.57) amid the pickup in longer-dated US Treasury yields, and the exchange rate may stage a larger advance over the coming days. Get your market update from @DavidJSong here:https://t.co/dlNXOrJnM9 https://t.co/LCQd26W1zF
  • US yields continue to climb, with the 10-year Treasury yield trading above 1.45% $ZN $ZB https://t.co/N4EDfwD3nZ
  • $USDJPY bull thesis appears quite constructive. Technicals show topside breakout above trend resistance following a period of consolidation. Bond yields providing the fundamental catalyst. Eyes on Aug/YTD highs. A broad-based deterioration in market sentiment poses downside risk. https://t.co/AazskXGjHq
Forex: British Pound to Steady Amid Mixed CPI, BoE Minutes

Forex: British Pound to Steady Amid Mixed CPI, BoE Minutes

Christopher Vecchio, CFA, Senior Strategist
British_Pound_to_Steady_Amid_Mixed_CPI_BoE_Minutes_fundamental_forecast_forex_market_news_body_Picture_5.png, Forex: British Pound to Steady Amid Mixed CPI, BoE Minutes

Fundamental Forecast for British Pound: Neutral

- British Pound Sees Risk Reversal Near High

- British Pound Outlook Supported by BoE Policy

- USD Maintains Broader Trend Despite Fed Easing – GBP Eyes 1.6200

The British Pound had a decent week, finishing -0.98% lower against the top Euro, while climbing nearly as high against the US Dollar by +0.83%, as data was mixed overall, providing neither a cause for rally or relief by the world’s oldest currency. Data was thin overall, with the November labor market readings representing the only significant event risk to the Sterling this week. Fortunately for the Sterling, the data came in mostly better than expected, with Jobless Claims dropping by -3.0K versus +7.0K expected, although Weekly Earnings disappointed suggesting that consumption could drop in the future. But our main attention is drawn to a future Bank of England governor, which when combined with the near-term fundamental backdrop necessarily suggests a “neutral” rating for the British Pound for the coming five days.

Primarily, the overarching theme that the British Pound will face in the weeks and months ahead will be a dismal growth picture marked by both high inflation and high unemployment, while inflation is expected to “overshoot” BoE targets over the coming years. Overall, this maintains our view that stagnation has set itself upon the UK economy; a symptom hard to rid one’s economy of, unless both fiscal policy and monetary policy makers move in lockstep. The stage has been set by Chancellor of the Exchequer George Osborne: the UK will remain on the austerity path for at least another year.

Accordingly, the big news this week, or rather, big news for those reading between the lines of central bankers’ speeches, was that incoming BoE Governor and current Bank of Canada Governor Mark Carney suggested that a nominal GDP targeted stimulus package would be appropriate for those central banks whose policies are operating at the zero bound of interest rates. Or, that if a central bank had already cut its key rates towards 0.00%, it could pursue a policy that would promise additional stimulus until a predetermined level of growth is reached; for example, the BoE could pledge an Asset Purchase Program expansion of £10B/month until annualized GDP hit +3.0%. Considering that the UK economy isn’t likely to see a growth figure above +2.0% annualized until late-2014 at the earliest, a nominal GDP target could be a heavy albatross around the British Pound’s neck if adopted when Governor Carney takes over in July 2013.

For now, as this is priced in over the coming months, we expect it to slowly erode yields and thus undermine the Sterling. But for this week, considering that holiday trading conditions are around the corner, we doubt that it will pose much of a significant threat; rather, it will be a growing conversation piece. Data this week isn’t enchanting itself, with the November Consumer Price Index report on Tuesday and the BoE Minutes on Wednesday.Also due are the November Retail Sales on Thursday and the final 3Q’12 GDP reading on Friday.

Of the expected data, the November CPI might be the least informative print of the year, with a huge disparity between the monthly and yearly readings. The BoE Minutes should underscore the notion that the BoE is willing to do more QE, but has chosen to remain on the sidelines for now. At the end of the week, the November Retail Sales offer a strong opportunity to see some upside in the Sterling, given the forecasts for a solid beat, while the final 3Q’12 GDP figure holding steady shouldn’t stoke much volatility. In sum, we are neither impressed nor disappointed with what the economic docket offers for the British Pound this week, leaving our bias at neutral, while expecting another middle of the road performance. –CV

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

DISCLOSURES