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Pound shrugs as UK GDP revised upwardsThe British economy performed better than expected in the fourth quarter. Final  GDP rose by 1.3% in Q4 of 2021, upwardly revised from the first quarterly estimate of a 1.0% gain. Final GDP beat the forecast of 1.0%. On an annualized basis, GDP in 2021 jumped 7.4%, a massive turnaround from -9.3% in 2020. The economy has almost completely recovered from the pandemic, with GDP currently only 0.1% below the pre-Covid level in Q4 of 2019. The recovery is certainly good news, but there are dark clouds nearby, namely, soaring energy prices and the spectre of stagflation. BoE Governor Bailey had a stark warning for consumers this week, saying that real incomes would suffer a "historic shock". The BoE has raised interest rates three consecutive times, but this hasn't slowed down inflation, which accelerated to 6.2% in February, a 30-year high. The Bank says the Ukraine war could push inflation as high as 8% in Q2 and even higher in the third quarter. It seems that double-digit inflation is a real possibility later this year, which would truly be a nightmare scenario for Governor Bailey and Finance Minister Rishi Sunak. The BoE doesn't have a magic answer for surging inflation, which has also reached the US and other major economies. The BoE, can, of course, hike interest rates in order to subdue inflation, but the danger is that high rates could choke off economic growth. Governor Bailey has a formidable challenge of charting out a rate-tightening cycle in which interest rates are high enough to lower inflation but don't derail the recovery. Time will tell if Bailey will "get it right" with the pace and size of upcoming rate hikes. GBP/USD faces resistance at 1.3281 and 1.3380 There is support at 1.3102 and 1.3022
by OANDA
Pound jumps on strong mfg. dataGBP/USD has resumed its upswing after a quiet start to the week. GBP/USD is trading at 1.3261 in the North American session, up 0.75% on the day. It was just one week ago that the pound was in the dumps, falling to the symbolic 1.30 line. Since then, the currency has gone on a tear, gaining around 2%. With plenty of turbulence and uncertainty, from the Ukraine war to oil prices to sizzling inflation, we could see further volatility in the currency markets in the short term. UK industrial order expectations for March jumped to 26, up from 20 in February and above the estimate of 16. Manufacturing output remains strong, as the sector continues to expand. The strong reading helped boost the pound today. The UK releases the February inflation report on Wednesday, with the markets bracing for an acceleration in inflation. The headline reading is expected to rise to 4.2% YoY, up from 4%, while Core CPI is projected to climb to 5.0%, up from 4.4%. The BoE continues to revise its inflation forecast upwards and has warned that CPI could hit a staggering 10% by the end of the year. The Bank has raised rates three straight times and seems likely to continue tightening in order to curb red-hot inflation. The surge in inflation has made government borrowing more expensive, and the cost of servicing the UK's national debt continues to rise. This poses a serious problem for Chancellor Rishi Sunak, who will deliver the annual budget on Wednesday. Consumers and businesses will be looking for goodies in the budget, but Sunak may be limited in what he can do, as he must allocate billions of pounds more for borrowing costs as a result of inflation and higher interest rates. In the US, Fed Chair Powell delivered a strong, hawkish message to the markets on Monday. Powell came out swinging, saying that the Fed was prepared to be more aggressive in raising rates if needed. Powell's message was crystal clear, as he noted that “the labor market is very strong, and inflation is much too strong” and said that the Fed would not hesitate to implement 50-basis point increases at future meetings if necessary. In response to Powell’s hawkish message, US Treasury yields rose on Monday to their highest level since 2019 and the upswing has continued on Tuesday, with the 10-year Treasury yield rising to 2.37%. GBP/USD has broken above resistance at 1.3259. Above, there is resistance at 1.3341 There is support at 1.3130 and 1.3048
by OANDA
1
GBPCHF could try to break the long lasting trend...or notGBPCHF is really undecided nowadays. It has a long lasting trend to fall since the January of 2000. Now it has formed a giant triangle bottoming at around 1.18. Now the Bank of England is in a rate hiking cycle while the Swiss National Bank does not indicate a rate hike any time soon, so a strengthening of the pound is very likely. Besides that, the shockwaves of Brexit are slowly fading, Boris Johnson and his administration set a clear path for the economy (hopefully a good path), so everything is in order, in theory. On the other hand, the war in Ukraine, the sanctions on Russia, the supply chain problems and the UK's firm anti-russian position and rethoric bring some uncertainty to the equation. On the long run I expect a possible break-out attempt to the upside, targeting the upper end of the falling yellow falling channel firs (around 1.247), then the upper end of the blue triangle (around 1.26). Be cautious! The other scenario is a rapid fall to the bottom of the channel (1.194), then to the bottom of the triangle (1.18). Follow me for more updates on the pair and other assets. Don't forget: money is weird and unpredictable, so plan for all possible scenarios and hedge your positions!
Long
by weirdmoney
EUR/GBP - Can it Break the Downtrend?The euro has been performing relatively well against the pound recently after a prolonged downward spiral going back to late 2020, but can it keep it up? The pair was given another boost by the Bank of England on Thursday, despite the MPC agreeing on a third consecutive rate hike taking the base rate to 0.75%. What weighed on the pound - and therefore lifted this pair - was the fact that one policymaker, Deputy Governor Jon Cunliffe, voted against raising interest rates, while the committee also tweaked the accompanying text to appear moderately less hawkish. That may not sound like much, what with an enormous majority still favouring a rate hike and a small tweak barely altering the outlook, which remains highly uncertain anyway. But it's all very deliberate and intended to send a message to the markets that they're priced too aggressively and not in tune with where the BoE sees rates going. And the response in the markets has been to pare back further hikes this year to four from five. This has dragged on the pound today and allowed EURGBP to hit its highest level since early February. And this may be where the pair could start to run into some resistance. The momentum indicators on the 4-hour chart don't suggest they will but it will be interesting to see how they look over the coming days as this was an unexpected event-driven reaction that may not be enough to carry it much further. The area between 0.8450 and 0.85 is littered with potential resistance points from prior levels of support and resistance to the 200/233-day simple moving average band. Rallies have repeatedly failed around this band since the pair broke below here at the start of last year so a break above here would be very significant. The next test above in that event could fall around 0.86 but a breakout of that significance could signal a much stronger move to the upside. Another rejection there could have traders looking lower once more, which may mean a continuation of the long-established trend and perhaps a move back towards levels not seen since the Brexit vote almost six years ago.
by OANDA
1
GBP/USD - Testing Key Support Ahead of Fed and BoEThe pound has been trending lower against the dollar since the Russian invasion of Ukraine as traders have sought the safety of the greenback in times of stress. But what's interesting in recent days is that while market sentiment has improved, the pair has continued to slide. And with it now approaching 1.30 - a major historical psychological barrier - ahead of both the Fed and BoE meetings this week, what's next for the pair? For a bit of context, both central banks are fully expected to raise interest rates this week and multiple times more this year. While the Fed is only just embarking on its tightening cycle, a 25 basis point increase this week would be the third consecutive hike for the BoE, with the previous two coming in December (15 basis points) and February (25 basis points). The perceived hawkishness of both could be key in determining the path of travel for the pair over the course of the week, with the market's pricing in at least five more hikes from the Fed and four more from the BoE this year (on top of this week). That and, of course, developments in Ukraine. It's interesting that, while 1.30 looks to be coming under some pressure at the time of writing, the momentum indicators on the 4-hour chart don't really offer much confidence. The divergence we're seeing suggests a breakout will be challenging and unless we see a shift in the MACD and stochastic, perhaps even vulnerable to a false breakout if it does move below. The longer-term trend is clearly against it though and if we do see a corrective move, the key levels that stand out are obviously 1.31 and 1.32 being notable recent areas of support and resistance on the way down.
by OANDA
GBPCAD shark pattern GBPCAD has formed a bullish shark pattern and price is approaching the lower band of a solid range in daily timeframe, we can in addition see a strong RSI DIVERGENCE in h4 chart, this situation is really common where there is a bottom in a market structure, the accumulation structure is clearly working and the pair will push towards the 0.50% retracemtn in next days around 1.6960. Use a proper money management and pay attention to BOE DECISION ON INTEREST RATES ON THURSDAY, if the MPC votes for a 50 bp hike there wil be a strong really, if there will be a 25 bp hike the gbp will remain the same (maybe a 30/ 50 pip move but nothing important). This analysis has been realized by Francesco Drago, founder of DRAGO INVESTMENTS Francesco
Long
by Dragon_Investments
Pound steady as retail sales reboundUK retail sales rebounded in January, with a gain of 1.9% m/m, its highest monthly gain since April 2021. The increase followed a decline of 4.0% in December and beat the consensus of 1.0%. The Omicron variant of corona continues to have a significant impact on consumer spending. The December drop was a result of consumers doing their Christmas shopping in October and November, while the January rise reflected the easing of health restrictions. With Covid regulations set to expire due to falling infection rates, we should see consumer spending continue to accelerate. The Bank of England remains under strong pressure to raise rates at its meeting in March. The markets have priced in a quarter-point hike in March at 100%, and the BoE will likely follow up with more hikes until inflation, which is at a 30-year high, is brought down. We can expect the BoE to deliver a more gradual pace of rate hikes than what has been priced by the markets. The Russia/Ukraine border remains extremely tense, although a feared invasion on Wednesday did not materialize. Tensions heightened on Thursday after a skirmish in a border region which the West feared was a pretext for a full-scale invasion. This sent the financial markets tumbling as risk sentiment dissipated. The US has disputed Russia's claim that it has reduced its forces on the border and says an invasion could occur at any time. Still, there is a ray of light for a diplomatic solution, as the US and Russian foreign ministers will meet next week, so an invasion appears to be on ice, at least for now. It's a safe bet that market direction next week will be largely set by developments in the Ukraine crisis and market participants should be prepared for volatility. There is resistance at 1.3640. and 1.3719 GBP/USD has support at 1.3487 and 1.3413 .
by OANDA
GBP/USD - Can it break 1.37?The next week could be really interesting for cable, with the Fed and BoE being among the two most aggressive central banks and inflation in both countries continuing to rise rapidly. The pair ran into resistance last month around 1.37, where the 200/233-day SMA band crossed the 50 fib level to provide a considerable barrier of resistance. It's been on the rise again over the last couple of weeks but the past five days has seen more volatility than direction. Both countries are seeing high inflation and five or six rate hikes are already priced in for the central banks. The question is how much further it can go? The recent trend has been bullish and if that continues, 1.37 will once again be key for the same reasons. A move above here would be extremely bullish, with the next test coming around 1.3834 - prior high and 61.8 fib level. Equally, a rotation lower could also send a strong signal, especially coming ahead of the previous high.
by OANDA
Will Euro Reverse Against the British Pound Post ECB and BoE?Following a surprise hawkish pivot by the European Central Bank as the Bank of England raised rates to 0.50% from 0.25%, EUR/GBP rallied the most since April 2021 this week. With markets already pricing in an aggressive BoE, that may leave room for equivalent ECB bets to catch up ahead. That could leave EUR/GBP tilted higher. The pair also closed at the highest since late December, reinforcing the key 0.8277 - 0.8364 support zone that has been in play since 2016. Even though EUR/GBP has been aiming lower since 2020, a closer look reveals that the pair has been consolidating for over 5 years. This has created a large rectangle where the ceiling lays around 0.9270 - 0.9499. The latest bounce off the floor of the rectangle may open the door to extending gains given confirmation. That would prolong the pair's long-term range-bound trend. Immediate resistance appears to be the 78.6% Fibonacci retracement at 0.8538 before a potential falling trendline from 2020 may come into play. On the flip side, a close under the rectangle floor, with confirmation, may hint at ending consolidating, leaving the pair at risk of extending losses. FX_IDC:EURGBP
by QM_Dubrovsky
Sterling yawns after BoE hikeThe British pound is slightly lower in Friday trading. It has been an excellent week for GBP/USD, which has gained 1.26%. If the pound can maintain these gains during the day, it will mark the currency's best weekly showing since December 2020. As was widely predicted, the BoE raised rates by 0.25% at Thursday's meeting. This brings the key rate 0.50% and was the first back-to-back rate hike since 2004. This didn't make much of an impression on the markets, as the pound rose only slightly after the meeting. What was surprising about the decision was that four of the nine MPC members voted to raise rates by 0.50%, which would have marked the biggest rate hike by the BoE in over 25 years. The large minority shows just how hawkish the BoE has become in recent months. Governor Andrew Bailey stated that the markets should not assume that the BoE planned a series of rate hikes, but it's questionable whether investors will pay close attention to his message. Bailey has a credibility problem after surprising the markets with his rate decisions late last year, and the tight 5-4 vote at the meeting shows significant dissension with regard to BoE monetary policy. The US nonfarm payroll report will be released later today. The report is often the highlight of the trading week, but this time around the markets are more focused on interest rate guidance and next week's US inflation report. The ADP employment report showed a massive loss of jobs, at -301 thousand. This was the sharpest decline since April 2020, when the Covid pandemic started. The markets aren't bracing for a repeat from the NFP, but expectations are low, with a consensus of 150 thousand. GBP/USD faces resistance at 1.3648 and 1.3740 There is support at 1.3522 and 1.3440
by OANDA
GBP/CAD - Jumps as BoC resists raising ratesThe pound has been range-bound against the Canadian dollar for the last week and that remains the case so far today, despite the Bank of Canada holding off on raising interest rates. It had been expected to start the tightening cycle today, with the market's pricing in up to five more over the course of the year after inflation hit a 30-year high and the labour market improved. But with the central bank taking a more patient approach and instead laying the foundations to raise rates in March, once it has a better idea of the Fed's plans, no doubt, the currency has come under some pressure. And expectations for that sixth hike in 2022 have dipped, with it now deemed a coin toss in December. Still a very aggressive start to monetary tightening, of course. As far as the chart is concerned, this still leaves the pair range-bound for now, with the upper end holding firm after the decision. It will now be interesting to see which end fails first, with the BoE also in the business of raising rates, after getting underway in December, with another widely expected next week. A move higher could see the pair quickly run into some resistance around 1.71, where prior support and resistance coincides with the upper end of the SMA bands on the 4-hour chart. A move below the 50 fib, and the range support, could be quite bearish, with support perhaps being seen around 1.6850 and 1.6725-1.6735.
by OANDA
EURGBP Long Idea EURGBP has been in a consistent downtrend since the 8th of December, falling from 0.86. area to the current levels of 0.834. The price has been making lower lows, edging ever so slowly to Feb 06's low of 0.8278. However, it appears that EURGBP has found some support at the current levels, with a retest of 0.838 on the cards. Our in-house view on EURGBP is long on a short-term bias, the RSI indicators on the Daily and 1hr are in oversold conditions which comply with our long bias.
Long
by Orion-Markets
GBPUSD is poised for a breakout GBPUSD is poised for a breakout if BOE sounded hawkish tomorrow. - The Bank’s Monetary Policy Committee meets tomorrow to decide what to do on borrowing costs, which remain at record lows of 0.1%. - If BOE hinted that it may raise rates in first half of 2022, specially after the inflation hit 10 year high in NOV - Inflation at 10-year high puts fresh pressure on the Bank of England - wait for a breakout to buy GBPUSD - place your stop loss at 1.3150
Long
by ChartDepth
EUR/GBP - Key Support HoldingWith both the ECB and BoE meetings now behind us, how do we assess the impact on the currencies and what it means going forward? Interestingly, there were no major surprises on either side. The BoE moved slightly earlier while the ECB tweaked its asset purchases, with the result being that the PEPP comes to an end in March while the support it provided is only slowly phased out over an additional six months. In terms of the technicals, there may also be some interesting takeaways. The spike lower yesterday saw the pair run into support around the 61.8 fib (4-hour chart) before quickly recovering to sit back above the 50 fib and 200/233-period SMA band. This had been key support prior to the meetings and remains so now. If 0.85 holds, it could potentially be a very bullish signal going into the new year. Another failure and the long-term downtrend may continue.
by OANDA
Today’s Notable Sentiment ShiftsGBP/BoE – Sterling jumped to December highs on Thursday after the Bank of England surprised investors by hiking interest rates by 15 basis points, taking the Official Bank Rate to 0.25%, with only Tenreyro dissenting in a vote split of 8-0-1. Commenting on the BoE’s decision, Berenberg noted that “having first guided markets into betting on a rate hike in November, the Bank of England today defied market expectations again by finally pulling the trigger. We expect a further 25 basis point hike in February 2022 to take the bank rate to 0.5%.” Meanwhile, IG added that “the announcement does look like a bit of a panic move – the Bank of England is probably regretting its decision not to move last month when Omicron wasn’t even an issue.” EUR/ECB – The ECB kept interest rates on hold at their December meeting but did announce the end of its pandemic emergency asset-buying scheme, with the central bank looking to begin tapering from March onwards. However, the ECB also promised support as needed via its long-running Asset Purchase Programme, confirmed its relaxed view on inflation, and signaled that any exit from years of ultra-easy policy would be slow.
by thunderpips
10
GBPNZD Long IdeaGBPNZD has just seen a small sell-off towards the levels of 1.9495 however it appears that there has been some support formed here. If the BoE decides to raise interest rates then it's likely for GBPNZD to push forward and test the previous high of 1.97. As the Fed plans more rate hikes in 2022 it's possible for the UK to follow suit, which is why I'm bullish on pound pairs approaching the end of the week. The stop-loss area for this trade is located just below the bottom of the range at 1.93658.
Long
by Orion-Markets