GBP Trading Outlook
The Sterling (GBP) the GBP/USD was quiet but well supported by EUR/GBP selling which fell back to 0.8600 by the end of the trading day. Cable has been grinding higher and testing 1.5200 twice this week and a third attempt may see the struggling Pound get some rare topside momentum. Looking ahead, February PMI manufacturing forecast at 51 vs. 50.8 previously. Looking ahead, mortgage approvals forecast at 56.5 vs. 55.8. February EU PMI forecast at 47.8 vs. 47.8 previously.
The Sterling (GBP) GBP/USD was range bound consolidating recent losses but unable to track the other risk assets higher. GBP/JPY was the main support and broke above Y140 in Asia today after the Bernanke led Yen selloff. Looking ahead, February German Unemployment Change forecast at -5 vs. -16. February Unemployment Rate forecast at 6.8% vs. 6.8% previously.
The Sterling (GBP) was sold as the downtrend resumed with some very dovish comments from BOE members such as Tucker’s ‘I hope we will think about whether there are constraints to setting negative interest rates’. GBP/JPY is under heavy selling pressure back under Y140 and searching for support. Looking ahead, Q4 GDP forecast at -0.3% vs. -0.3% previously.
The Sterling (GBP) defied gravity rallying as EUR/GBP slumped through 0.8600 in the Asian session Tuesday from the lofty 0.8800 level early Monday morning with the market caught heavily long. The recent selloff on the GBP/USD hit fresh lows yesterday on the AAA rating downgrade. Looking ahead, CBI Distributive Trades forecast at 16 vs. 17 previously.
The Sterling (GBP) was in the spotlight as rating agency Moody’s cut its AAA rating to AA1 stable. The reaction so far negative may lead to a rally with the cut widely anticipated and sell the rumor buy the fact a game often played with such announcements. This could play out if the UK government or BOE come out with hawkish comments or plans to reclaim its AAA rating sometime in the future. Looking ahead, ECB Weidmann Speaks.
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