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
Bearish
Oil - US Crude
Mixed
Wall Street
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
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Mayor of Los Angeles orders a stay-at-home order amid rising Covid cases $DXY $SPX
  • The dispute between the Federal Reserve and the Treasury Department concerned economists and government officials last week. Traders, however, appeared unfazed as U.S. equity markets proceeded to higher ground. Get your market update from @FxWestwater here:https://t.co/DKK7WWHKlu https://t.co/K1f9Y1h4sn
  • China official urges preparation for Covid vaccine production - Xinhua via BBG
  • Over the past seven days, $EUR has been the best performing G10 major vs the #USD with a 1.66% spot return while $GBP has been the worst at -0.11% spot return $EURUSD $GBPUSD $DXY
  • The US Dollar (via the DXY Index) has hit fresh lows amid the latest headlines around US fiscal stimulus talks. Get your market update from @CVecchioFX here:https://t.co/yDXdpZIcxq https://t.co/GlSrdNjEeZ
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Gold: 0.22% Oil - US Crude: 0.14% Silver: -0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/WR0TUUbAnB
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.12% 🇨🇭CHF: 0.09% 🇪🇺EUR: 0.08% 🇨🇦CAD: -0.02% 🇯🇵JPY: -0.03% 🇳🇿NZD: -0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/mgBg1eesms
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 94.68%, while traders in EUR/USD are at opposite extremes with 73.16%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/ZyugXjE2ov
  • The British Pound is eyeing a push to fresh yearly highs against the US Dollar. However, various technical setups suggest GBP could lose ground to JPY, EUR and NZD in the near term. Get your $GBP market update from @DanielGMoss here:https://t.co/NSUnZnxAdi https://t.co/Ounuyh073c
  • The Dow Jones index appears to be ranging between 22,920 to 30,000 over the past few weeks. The overall trend remains bullish biased, but its upward momentum is fading as Bollinger Band width narrows. A decisive break above 30,000 resistance may open the door for further upside. https://t.co/pvWoVloiZV
Hone Your Focus When Trading the British Pound

Hone Your Focus When Trading the British Pound

2018-03-22 02:32:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • There a number of conflicting, high profile events that will complicate trade for risk assets, Dollar, Euro and more
  • For the Pound, the Brexit is still the dominant concern; but it is important to account for data, the BoE and US tariffs
  • EUR/GBP will be a fundamentally-loaded cross; GBP/USD and GBP/JPY complicated; while GBP/CHF, GBP/AUD and GBP/CAD simplify

Are you trying to untangle the key fundamental drivers for your Pound setups? Are you watching the Bank of England rate decision? Join Christopher Vecchio as he covers the event live. Sign up on the DailyFX Webinar Calendar page.

Tumultuous Fundamental Seas Create Difficult Trading

When there is an abundance of high level fundamental themes and event risk overlapping, the result is not the idealized scenario of high volatility and productive trends that traders typically pine after. Instead, the result is more often difficult trading conditions with erratic activity with productive moves sabotaged before they take true root. Looking across the global docket, many of the most liquid currencies face this oppressive backdrop. For the Dollar, we have passed the FOMC rate decision only to now enter the gravity of US tariff announcements - both on the world (steel and aluminum) and reportedly with China. The Euro in turn is facing the European Union summit and possess the greatest risk as a trigger for global risk aversion should the US deny an exemption to the collective economy. The British Pound is another such currency weighing Brexit, the Bank of England rate decision and its own status with tariffs. Let's focus on the Sterling.

Hone Your Focus When Trading the British Pound

Brexit Is Still Top Priority, Even if it Complicates Markets

Over the next 24 hours alone, there will be a number of fundamental storm fronts converging on the Pound. All discrete data and general themes accounted for, the ever-present Brexit remains the most influential and persistent driver - whether that translates into volatility, a trend or an anchor against cross winds. The ongoing divorce proceedings between the UK and EU is a constant fog over the Sterling. The aftermath of the actual vote in summer 2016 was a persistent dive that found its trough with a flash crash in October. since then, there has been a general drift towards recovery with a more concerted optimism through 2018 specifically. This tail wind seems to reflect a modest optimism that caters to a sense that the currency still has a lingering tinge of 'worst case scenario' that can be safely positioned against. Perhaps in the later months of 2016 or the first half of 2017, that would have been a true observation. At these levels, however, the risks look underpriced as the Pound drifts higher.

British Pound Index

Hone Your Focus When Trading the British Pound

The Implications of the BoE, EU Summit and US Tariffs

There is nothing explicit on the docket that suggests the UK is going to make tangible progress in filling in the missing details of its position on the Brexit. However, many of the significant thrusts for the market on this particular front have come with little forewarning. One event that will weigh on this theme quite heavily - just from the other side of the table - is the EU summit. While the leaders of the 27 remaining members to the Union are due to speak on a number of topics of importance, the Brexit is definitely on the agenda. Another high-profile UK event that will offer concentrated response is the BoE rate decision. This is not expected to end in a change of rates, but there is still a substantial speculation for further tightening this year in the financial markets. This event will be analyzed for implications for timing of the next hike. According to swaps, the probability of a hike from the BoE before end of the year is approximately 89 percent. Only the Fed and BoC are on more hawkish settings, yet what has that earned for the Dollar and Loonie respectively as of late? Another consideration that needs to be monitored closely is the UK's exposure to tariffs. Much of the interest is on the US, China and the EU. The United Kingdom is just as exposed and it will register the effects whether direct or indirect moving forward.

Which Pound Crosses are Complicated and Which Refined

When looking for Sterling pairs to consider for trading against all of this uncertain and potential volatility, it is important to segment. Those pairs that are heavily skewed due to their fundamental backdrop include the GBP/USD and GBP/JPY. The tariffs on the former and risk trends (which can follow trade wars) for the latter present drivers that can overpower Brexit given the correct motivation. A further detriment to these pairs is the lack of actionable technical analysis they represent. EUR/GBP is right in the middle of the Brexit conversation, but the event poses risk to both sides. Further, their is a distinctive range whose lower boundary we are currently testing. GBP/CHF has a meaningful attachment to the divorce owing to the Franc's relationship to the Euro, but the astounding 13-day advance suggests a market that is prime for rebalance. The one-sided drives and subsequent recent pullback from GBP/CAD and GBP/AUD offers a similar case of natural correction owing to a one-sided market. We discuss what to watch when trading the Pound in today's Quick Take Video.

GBP/CHF

Hone Your Focus When Trading the British Pound

EUR/GBP

Hone Your Focus When Trading the British Pound

To receive John’s analysis directly via email, please SIGN UP HERE.

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

DISCLOSURES