GBPUSD – Will 1.3400 Hold?

GBPUSD – Will 1.3400 Hold?

Chart Of The Day

Today almost all the BoE members were cautious in their Parliamentary testimony. They all suggested that monetary policy will move towards normalization sooner rather than later. This indicates that the much expected BoE rate hikes will simply be postponed to end of summer rather than 2019.

UK data is the most important economic report in G-7 calendar this week and tomorrow’s UK CPI data, as well as Thursday’s Retail Sales, will go a long way to determining if cable can move through 1.3500 and stage a sustained rally.

In the meantime, the pair continues to hold around the 1.3400 having failed in its breakout of 1.3500. If the numbers miss their mark, the pair could be on its way towards 1.3300 by week’s end.

Has GBPUSD Found Support?

Has GBPUSD Found Support?

Chart Of The Day

Today, cable continued to probe the 1.3750 level as shorts tried to push it past the March lows. The pair has seen a stunning turn around as it lost more than 500 pips in the last 10 days and shows no signs of bottoming out. This week brings a slew of UK PMI data reports starting with tomorrow’s PMI Manufacturing data. The market is anticipating a slight decline to 54.9 but if the data prints considerably worse the pound is sure to slice through the 1.3700 figure.

On the other hand, an upside surprise would be a welcome relief to the bulls after so many days on one-way price action and could trigger a short covering rally back towards 1.4000 as traders reassess the risk of recession. For now, GBPUSD hangs at key support as data determines its fate.

Today’s Trades 04.12.2018 – GBPUSD, USDJPY, USDCAD

Swing

*Good morning/afternoon everyone!*

The currency markets are eyeing geopolitical risks this morning as President Trump says an attack on Syria could happen very soon, or “not at all.” While this creates more confusion than clarity, investors are relieved that an announcement wasn’t made overnight. By hitting Syria, the President is taunting Russia and the greatest implication aside from military engagement, U.S. dollar weakness and risk aversion is higher oil prices. USD/CAD remains under pressure was investors eye the headlines for updates on Trump’s decision. Softer Eurozone industrial production makes the euro the weakest performing currency this morning. Sterling came back strongly after dropping below 1.4150. USD/JPY has moved to the top of its recent range on the back of higher bond yields and Dow futures, which are pointing to a positive open. AUD is flat while NZD continues to outperform. There are no major U.S. economic reports scheduled for release today so keep on the headlines and stocks.

*The MAIN THEMES I see today are*

+GBP
+CAD
+NZD
-EUR
-USD (but +USDJPY)

*Trading Biases*

+GBP, +CAD, +NZD
-EUR, -USD (except USDJPY), -AUD, -CHF, -JPY

*Today’s Initial Trades*

Here’s the summary --

1. Sell USDCAD at 1.2594, stop at 1.2623, Target 1.2563
2. Buy USDJPY at 107.13, Stop at 106.85, Target 107.41
3. Buy GBPUSD at 1.4185, stop at 1.4157, Target 1.4213

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 04.11.2018 – EURGBP, USDJPY, GBPUSD, USDCAD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against all of the major currencies this morning as investors wait for the next shoe to drop. With President Trump set to announce a response to the chemical attacks in Syria, ongoing trade tensions, the NAFTA meeting and the investigations in Russia / Trump’s lawyer, there’s significant headline risk today. U.S. CPI is expected to tip higher given stronger PPI and gas prices but the impact on the greenback may be limited. The FOMC minutes are also due later this afternoon. The best performing currencies this morning are the euro and Japanese Yen. Mario Draghi is speaking but so far there hasn’t been any significant headlines. We are also seeing some profit taking in the commodity currencies as European equities sell off and Dow futures point to a lower open. Global bond yields are down across the board which is adding pressure on USD, EUR and GBP.

*The MAIN THEMES I see today are*

-GBP
-CAD
+EUR
-JPY

*Trading Biases*

+EUR, +CHF
-GBP, -CAD, -JPY, -AUD
mildly -NZD, -USD (trend is down but data could prop the buck)

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURGBP at .8720, stop at .8692, Target .8748
2. Buy USDCAD at 1.2612, Stop at 12584, Target 1.2640
3. Sell USDJPY at 106.90, Stop at 107.18, Target 106.62
4. Sell GBPUSD at 1.4189, Stop at 1.4217, Target 1.4161

Close ALL open day trades by 10:20AM NY / 15:20 GMT

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against all of the major currencies this morning as investors wait for the next shoe to drop. With President Trump set to announce a response to the chemical attacks in Syria, ongoing trade tensions, the NAFTA meeting and the investigations in Russia / Trump’s lawyer, there’s significant headline risk today. U.S. CPI is expected to tip higher given stronger PPI and gas prices but the impact on the greenback may be limited. The FOMC minutes are also due later this afternoon. The best performing currencies this morning are the euro and Japanese Yen. Mario Draghi is speaking but so far there hasn’t been any significant headlines. We are also seeing some profit taking in the commodity currencies as European equities sell off and Dow futures point to a lower open. Global bond yields are down across the board which is adding pressure on USD, EUR and GBP.

*The MAIN THEMES I see today are*

-GBP
-CAD
+EUR
-JPY

*Trading Biases*

+EUR, +CHF
-GBP, -CAD, -JPY, -AUD
mildly -NZD, -USD (trend is down but data could prop the buck)

*Today’s Initial Trades*

Here’s the summary --

1. Buy EURGBP at .8720, stop at .8692, Target .8748
2. Buy USDCAD at 1.2612, Stop at 12584, Target 1.2640
3. Sell USDJPY at 106.90, Stop at 107.18, Target 106.62
4. Sell GBPUSD at 1.4189, Stop at 1.4217, Target 1.4161

Close ALL open day trades by 10:20AM NY / 15:20 GMT

GBP/USD Headed for 1.42?

GBP/USD Headed for 1.42?

Chart Of The Day

GBP/USD Headed for 1.42?

GBP/USD will be on the move with U.K. composite and service sector PMI numbers schedule for release on Thursday. So far we know that manufacturing activity remained stable but construction activity contracted in the month of March. Higher highs and higher lows over the past 4 trading days suggests that GBP/USD wants to rally but strong data will be needed to drive the currency pair upwards. The Bank of England is widely expected to be the next major central bank to raise interest rates but investors are looking for data to validate their hawkishness before buying the currency.

Technically, GBP/USD has strong support at 1.40. Not only is this a significant round number, but its also where the 20 and 50-day SMAs converge. If GBP/USD breaks above 1.41 on the back of stronger data, the next stop could be 1.42.

Today’s Trades 03.20.2018 – USDCAD, USDCHF, CADJPY, GBPUSD

Swing

*Good morning/afternoon everyone!*

After yesterday’s sharp sell-off in stocks, we are seeing risk appetite return this morning with the U.S. dollar trading higher against most of the major currencies. USD/JPY is at 106.50 and EUR/USD is holding above 1.2300 but support looks tenuous as the dollar could add to its gains ahead of tomorrow’s FOMC rate decision. Sterling took a hit from weaker CPI and could succumb to stronger selling than the euro. The commodity currencies are holding on strong with USD/CAD eyeing a move to 1.3050 and beyond. The Australian dollar is one of the strongest performers for no reason other than the fact that it experienced heavy selling over the past few days, so a healthier reversal is likely. The New Zealand dollar is lagging behind as investors worry about this morning’s dairy auction and tomorrow afternoon’s RBNZ rate decision.

*The MAIN THEMES I see today are*

+USD
+CAD
+AUD
-GBP
-EUR
-CHF

*Trading Biases*

+USD, +CAD, +AUD
-GBP, -EUR, -CHF, -JPY
neutral NZD

*Today’s Initial Trades*

Here’s the summary --

1. Buy CADJPY at 81.40, Stop at 81.12, Target 81.68
2. Buy USDCHF at .9528, Stop at .9500, Target .9556
3. Sell GBPUSD at 1.4030, Stop at 1.4058, Target 1.4002
4. Sell USDCAD at 1.3068, Stop at 1.3096, Target 1.3040

Close ALL open day trades by 10:20AM NY / 15:20 GMT

GBP/USD Headed to 1.38?

GBP/USD Headed to 1.38?

Chart Of The Day

GBP/USD Headed to 1.38?

It should also be a busy week for sterling with a Bank of England monetary policy announcement, retail sales, consumer prices and labor market reports scheduled for release. After numerous tests, GBP/USD rejected 1.40 and appears on its way back down to 1.3800. Whether this key level is broken or not will be determined by the BoE and FOMC rate decisions. American policymakers meet before the Brits and they are widely expected to raise interest rates for the first time this year. Yet what’s important is not the rate hike but their guidance on future tightening. If the dot plot shows policymakers leaning towards 3 instead of 4 hikes, the dollar should fall, driving GBP/USD higher. If it shows 4 instead of 3, GBP/USD could fall aggressively. As for the BoE, at the last meeting sterling shot higher after the central bank raised their 2018 and 2019 GDP forecasts adding rates may need to rise faster and earlier than previously expected. This hawkishness caught the market by complete surprise. Although here’s been more weakness than strength in the U.K. economy since the last meeting (manufacturing activity slowed, retail sales growth barely turned positive) and consumer price pressures eased, its unlikely that the central bank will walk back their positive outlook so quickly. This is not a monetary policy announcement that is accompanied by a press conference by Mark Carney (like the last one) so the statement is likely to be unchanged.

Technically, after a series of lower highs and lower lows, GBP/USD has broken below the 20 and 50-day SMA. This move is not only bearish but signals a potential move below 1.3800.

GBPUSD 1.4500 – Seriously?

GBPUSD 1.4500 – Seriously?

Chart Of The Day

Cable has been on a tear this week after bouncing off the 1.4000 level the pair made a very unusual V-shaped recovery mercilessly squeezing the trapped shorts. Although data from the UK has been mediocre at best and Brexit negotiations have not yielded any additional progress, the market does not seem to care.

There appears to be a very sustained bid the in the pair and for now, every dip looks to be a buy. It difficult to say how long such unbridled flows can sustain themselves, but the pair is a clear beneficiary of anti-dollar flows and tomorrow could be a true test of its momentum power if the NFPs disappoint. With the market leaning long on the number as forecasts project anywhere from 175-200K jobs, any serious miss would put the Fed rate hike path in doubt and would fuel even more anti-dollar sentiment. If cable is able to take out the post Brexit highs of 1.4345 then 1.4500 would come into view regardless of the funda picture

Today’s Trades 01.29.2018 – EURJPY, EURAUD, GBPUSD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading higher against all of the major currencies this morning but the modest increase in USDJPY suggests consolidation rather than a full blown recovery. Yields are up across the board which may be helping the dollar but with the yen pairs still depressed, currencies have not recouped with Treasuries or other fixed income markets for that matter. With all this in mind, the dollar was sold aggressively oversold last week causing many currencies to become overextended and these corrections are likely to continue during the North American session. This is a big week for the dollar with a FOMC meeting, non-farm payrolls report and State of the Union address from President Trump so there’s motivation for profit taking. Today specifically, personal income and spending numbers are due -- they are likely to be mixed with wages up but spending softening in December . The weakest performing currency this morning is sterling and the strongest is the U.S. dollar followed by the Australian dollar. No reports were released from either country but U.K. yields are up the least this morning.

*The MAIN THEMES I see today are*

-EUR
-GBP
+JPY
+AUD
-NZD

*Trading Biases*

-EUR, -GBP
+JPY
mildly +USD but -USDJPY
mildly -AUD, -NZD, -CAD but relative strength

*Today’s Initial Trades*

1. Sell EURJPY at 134.82, Stop at 1.3510, Target 134.54
2. Sell EURAUD at 1.5315, Stop at 1.5343, Target 1.5287
3. Sell GBPUSD at 1.4072. Stop at 1.4100, Target 1.4044

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Is GBP/USD About to Peak?

Is GBP/USD About to Peak?

Chart Of The Day

Is GBP/USD About to Peak?

The prospect of a Brexit deal this year, U.S. dollar weakness, risk appetite and stronger U.K. data helped propel GBP/USD above 1.43 making sterling the second best performing currency this week. Public sector finances beat expectations, earnings grew at a faster pace in November after a strong October and GDP growth accelerated in the last 3 months of the year. 2018 will be the year that a Brexit deal gets done and all signs point to continued progress. Recent comments from Bank of England Governor Carney were also positive with the central bank head looking for the global growth to accelerate and for the U.K. to recouple with the rest of the world. Despite these developments, sterling was driven higher primarily by U.S. dollar weakness and we expect that to remain the case in the coming week as the manufacturing and construction sector PMI reports are the most significant releases on the U.K. calendar.

Technically, the 2 flameout candles at the end of the week are concerning particularly as the peaks come right underneath the 200-week SMA. If GBP/USD fails to recapture 1.43, the next stop will be 1.40.

GBP/USD – Fails Below 1.40, Is 1.37 Next

GBP/USD – Fails Below 1.40, Is 1.37 Next

Chart Of The Day

GBP/USD – Fails Below 1.40, Is 1.37 Next

After seven straight days of gains, we’ve finally seen a pullback in sterling. It took a softer retail sales report to turn the currency around as GBP/USD tried to make a run for 1.40. Over the past month, we seen significant gains and while we believe there will be further gains in 2018, the currency pair is due for a correction. Prime Minister May received the votes she needed to approve the key European Union (withdrawal) Bill and despite European Commission President Juncker’s hope that Brexit will be reversed, 2018 will be the year that a deal gets done. The Spanish and Dutch have already thrown their support behind a soft Brexit and UK officials will be operating under that assumption. In the meantime, as debates and negotiations continue, UK data has taken a turn for the worse with consumer price growth slowing year over year and retail sales taking a nosedive in the month of December. Excluding auto purchases, retail sales experienced its largest decline in 7 months. This does not bode well for next week’s fourth quarter GDP report as spending slowed in the last 3 months of the year. UK labor market data is also due for release and investors will be eager to see if wage growth also weakened. The prospect of softer wage data (after last month’s strong rise) leads us to believe that GBP/USD could slip down to 1.37.

Technically, the GBP/USD rally stopped short of the 38.2% Fibonacci retracement of the 2014 to 2016 decline. Right now there’s still a series of higher lows and higher highs but if GBP/USD breaks below 1.38, we could see a deeper correction that takes the pair to at least 1.37 and possibly even to the 20-day SMA near 1.36. However if 1.3950 is broken, the next stop will be 1.40 at which point, the big battle begins.

Is GBPUSD Headed for 1.40?

Chart Of The Day

Sterling rose to its strongest level since June on the back of U.S. dollar weakness and the prospect of a soft Brexit. On Friday, there were reports that the Spanish and Dutch support a soft Brexit that keeps Britain more closely tied with the rest of the region. The EU Parliament is also looking to soften proposals on the forced relocation of clearing houses, reducing the risk that the UK might lose such lucrative business. We’ve said it before – 2018 will be the year that a Brexit deal gets done and these are all signs that progress is being made. With that in mind, next week, Parliament will debate Brexit on January 16 and 17th, so keep an eye out for market moving headlines. Sterling will be in play with UK inflation and retail sales data scheduled for release.

Although we are looking for both reports to surprise to the downside, on a technical basis, there’s no major resistance in GBP/USD until the 38.2% Fibonacci retracement of the 2014 to 2016 decline near 1.3975. The trend is strong and further GBP/USD gains are likely.