GBP Trading Outlook
The Sterling (GBP) good EUR/GBP selling once again saved the GBP/USD from part of the large falls overnight but we did pull back from day highs at 1.5725 to below 1.5600 in the US session. Strong UK May Retail sales at 1.4% vs. 1.0% helped GBP outperform against most risk currencies. The catalyst for heavy selling later was rumors of downgrade of most UK banks by Moody’s. Looking ahead, German June IFO forecast at 106.1 vs. 106.9 previously. Also ahead, EU Finance Ministers meet.
The British pound (GBP) had a very volatile session versus the US dollar, opening at 1.5720, recording a daily high at 1.5777 and a daily low at 1.5650, before it closed at 1.5705. This was on the back of the minutes revealed from the last Monetary Policy Committee (MPC) meeting. Apparently, the Bank of England (BoE) had a split 5-4 voting against additional asset purchase, with the Governor Mervyn King on the minority.
The Sterling (GBP) A drop in UK CPI hurt the GBP/USD and meant most of the risk rally was missed. Resistance was seen at 1.5600 and we need to get sustained good news to help the GBP/USD resume its uptrend. EUR/GBP rallied towards 0.8080 with the Eurozone rumours helping the buyers halt the slide. Looking ahead, May German PPI forecast at -0.2% vs. 0.2%. Also UK April Unemployment rate forecast to remain at 8.2%. Also MPC minutes released June meeting forecast at 9-0 hold.
The Sterling (GBP) was on the backfoot as the EUR/USD losses mounted but the GBD/USD stood up well supported by fresh EUR/GBP selling. EUR/GBP closed just above 0.8000 and a break below may see the cross trade towards 0.7800. The market has been selling for a few months but the support at 0.8000 has proven too solid so far. Looking ahead, May CPI forecast at 0.1% vs. 0.6% previously. Also May Retail Price index forecast at 0.2% vs. 0.7% previously.
The Sterling (GBP) GBP/USD is strong above 1.5700 as the relief rally begins to get legs and the market plays catch up for the GBP/USD. The recent move from 1.6200 to 1.5300 means the topside is still significant if the EU debt crisis can be delayed or resolved in the short term. EUR/GBP is a good pair to watch to help you gauge the current EURO strength/weakness bias in the market.
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