GBP Trading Outlook
The Sterling (GBP) reacted positively to new BOE Governor Carney comments that he will be looking to create an exit plan for the BOE’s recent Asset Purchases which surprised the market given expectations of a more dovish tone. He rejected the FED model of unlimited printing of money and was very candid in his expectation of the tough road ahead for the UK economy. Confidence seemed to be restored in the Pound and gains were strong especially against the Euro. Looking ahead, German December Trade Balance forecast at 14.8bn vs. 14.6bn previously.
The Sterling (GBP) the GBP/USD will be vulnerable to its own interest rate event risk today with the MPC meeting but widely forecast to stay on hold. Volatility may come from the future BOE Governor who will be speaking before the MPC and may offer his own view on the current UK monetary policy. Looking ahead, Future Governor Carney Speaks. MPC Forecast to hold rates at 0.5%. Also, ECB Interest Rate Meeting forecast to hold at 0.75% with attention on President Draghi’s press conference afterwards.
The Sterling (GBP) the GBP/USD was whippy hitting 1.5800 after better than expected services PMI in January at 51.5 vs. 49.5 previously back into expansionary territory. Fresh selling emerged at the highs and accelerated lower to fresh trend lows as EUR/GBP buying undermined the Pound once again. Looking ahead, January Halifax HPI forecast at -0.2% vs. 1.3% m/m. Also December German Factory Orders at 0.8% vs. -1.8% previously.
The Sterling (GBP) the GBP/USD got support from the EUR/GBP liquidation from 0.8700 down to 0.8560 and helped cable lift from 1.5700 to 1.5750. The GBP/USD has already been under pressure over the last few weeks so the market could not push lower but further European stock market jitters could lead to more losses ahead of the BOE on Thursday. Looking ahead, January EU PMI services forecast at 48.3 vs. 48.3 previously. Also UK January PMI forecast at 49.5 previously.
The Sterling (GBP) it was a tail of two cities on Friday with the GBP/USD clobbered unable to track stocks higher and instead falling on the back of weak economic data. January Manufacturing PMI dropped to 50.8 vs. 51.4 previously. EUR/GBP buying was another source of GBP weakness with the important cross hitting 0.8700 on Friday. Looking ahead, UK January Construction PMI previously at 48.7. Also, December EU PPI forecast at 0.1% vs. -0.2% previously.
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