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GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: STRONG BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP. Due to the continued improvement in economic data as the reopening accelerates, we have updated out Fundamental bias for Sterling from Bullish to Strong Bullish. It is true though that a lot of the positive surrounding the UK’s economic recovery should already be reflected in the price, but as long as the data continues to surprise to the upside the trend should be supportive for the GBP as it should provide further support for policy normalization from the BOE.
by thunderpips
Gbp/Usd : Inevitable stop loss cluster hunt 1.4400 handle ?Gbp/Usd is trading inside the Strong Rectangular range since the Brexit, lacking essential catalysts for an upside breakout/Central bank keep intervening it to support the economy. On daily TF, price is approaching the strong resistance around 1.4200 and likely to make 150-200 pips high to clear the cluster of stop losses / Speculative Sentiment Index is around 30% on an average. Having said that, it is not that easy for the price to break upside range invincibly without any strong economical or geopolitical catalyst. Hence we are expecting a phase 1 retracement towards the 23.6% fib around 1.3560 once the above mentioned stop loss cluster of 1.4400 handle is cleared. Daily Trend : Up Major Trend : Range Signal : Sell Limit @ 1.42xx-1.4400 Stop Loss : 1.45xx Target : 1.3560
by UnknownUnicorn13514545
GBP - FUNDAMENTAL DRIVERSFundamental bias: Bullish 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
GBP/USD: IDEAHere is an analysis on the GBP/USD GU is currently trading @ 1.41200 Our expectations on the pair have now turned bearish We have bearish harmonics on both the 4H & 1D chart But GU is still currently bullish as you can see it is still trading within the current trend line If GU breaks above 1.41500 we'd expect it to hit 1.42 before falling back to 1.40, then 1.39 creating a perfect selling opportunity for us. It would be advantageous to place Sell Limit entries @ that level On the other hand if the pair breaks below its current trendline & treats 1.41 as resistance then we would expect it to fall further to 1.40, 1.39 Do note that there still is a bearish harmonic present on the 1M chart. link to previous analysis below
by fxspott
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. The most recent BOE meeting wasn’t as hawkish as markets were hoping for, but we did see the bank make some substantial upgrades to the economic outlook and confirms that the bank is moving further away from ultra-easy policy and gradually towards normalization. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
BOE – What to expect – Bank of AmericaBank of America discussed its expectations for this week’s BoE meeting in a recent note to clients, arguing that risks are tilted to the upside. Bank of America explains: We expect the BoE to endorse market expectations of two rate hikes by end-2024 in this week’s monetary policy report… We look for the BoE to taper QE purchases at next week’s policy meeting. If not this week, then June. The risks of a more hawkish BoE should be supportive for GBP, but much of the heavy-lifting on UK rates was done through 1 Q. That the BoE could announce Asset Purchase Facility (APF) tapering should not come as a total surprise given its stated objective to extend purchases through to end-2021. How the BoE views the outlook beyond the expected sugar rush and its implications for the rate profile is arguably more significant for the pound.
by thunderpips
6
Chart of the day: Rates markets are pricing...Rates markets are pricing in faster policy normalization for the BOE With the Bank of England just a few days away, it’s always a good idea to reflect on the rates market and see what it’s pricing in. Looking at the SONIA quarterly futures rates we can see that markets are pricing in much faster policy normalization for the UK compared to the likes of the FED. SONIA futures are pricing in a first hike from the BOE by SEP 2022 (compared to March 2023 for the FED), and a total of 3 hikes (assuming 10bsp each) by March 2023. How does this information help us? It is helpful as it shows us a bit of a disconnect between the recent weaker price action, we’ve seen in sterling versus what the rates markets are implying for policy normalization. Thus, even though a lot of policy normalization expectations are baked into the rates market, the same is not reflected in sterling’s price action just yet. For now, consensus is not expecting the BOE to follow, the BOC’s lead by tapering asset purchases. But arguably the bigger focus will fall on the BOE’s rate hike projections.
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by thunderpips
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS: BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
GBPUSD - Where to next? GBPUSD (Cable) - Is it time to buy? Technical view of GBPUSD: Unfortunately, we've been stuck within a range for a while... Support: 1.38570, 1.37740, 1.36830 Resistance: 1.40020, 1.40785, 1.41600 Pattern: Double bottom - Could be producing inverse H&S. Personally, I've been bullish GBP for while since we had 'Brexit' yet we are still trying to sort that out ha! But overall, I am bullish as long as we have weak dollar we could see 2018/17 price action coming through as I stated since last yr. (Disclaimer: As a trader, my opinion can change at any moment) Key Tip: A great trader once told me, "Trade what you see, not what you think". I can produce you this beautiful chart full of my technical aspects, but only you can put your on edge and take part of this trade idea. Fundamentals: FOMC - Rates unchanged as expected, QE same pace continues and Powell did mention yesterday - It isn't time for 'tapering', also noted some assets prices are high. Dovish tone continue. I personally think we will have more of movement in August Jackson Hole. The Dovish tone brought down DXY for new low since February. SPX Record high as expected technically as well. EUR tested 1.2150, could extend towards 1.22/1.23 areas for EU - President macron easing from Lockdown coming soon. As well, let's take into account Biden proposal of high tax to pay back all this debt, the US equity market doesn't like this. Have a great day ahead. Trade Journal (Just a trade idea, not a recommendation)
by Trade_Journal
GBP: Current Sentiment DriversLatest Developments: April 26 – The UK’s coronavirus count increased to 4,406,946 cases (+2,064). April 21 – CPI for March increased to 0.7% Y/Y (prior 0.4%) and printed at 0.3% M/M (prior 0.1%). Core CPI increased to 1.1% Y/Y (prior 0.9%) and printed at 0.4% M/M (prior 0.0%). April 20 – The unemployment rate for February fell to 4.9% from a prior of 5.0% employment change printed at -73K while average earnings printed at 4.5% 3M Y/Y. For March, claimant count change printed at 10.1K. March 31 – GDP for Q4 printed at 1.3% Q/Q and -7.3% Y/Y, revised from 1.0% and -7.8%, respectively. The report published by the ONS also noted that household savings for the quarter grew to their biggest ever level. This is supportive of recent comments from the BoE, who expect a significant increase in consumer activity once lockdowns are lifted. March 18 – At their March meeting, the BoE kept its official Bank Rate unchanged at 0.10% and its QE programme at £895 billion. The BoE added that they do not intend to tighten policy until there is clear evidence that there is significant progress towards eliminating spare capacity and achieving its 2% inflation goal. Future Sentiment Shifts: There are several risks to GBP’s outlook, particularly with respect to the UK’s coronavirus/lockdown outlook and interest rate expectations. Of these two, expect the UK’s coronavirus outlook to play the more influential role in the short term as the UK’s coronavirus vaccine rollout continues to show signs of stabilizing its breakout, which in turn, should allow the UK to ease lockdown restrictions in the months ahead. However, in the medium term, as the market’s focus shifts, monetary policy should dominate. Regarding monetary policy, risks still remain; although, further easing appears unlikely at this point and markets looking for a hike in 2022. Primary Drivers: Bank of England – Monetary Policy in the UK remains highly influential to GBP’s fundamental outlook. Expectations for policy tightening should prove GBP positive, while expectations for policy easing should prove GBP negative. Brexit – The outlook for the UK’s exit from the EU in December remains a key influence for GBP as it poses significant risks to the UK’s economic outlook. With the UK set to leave at the end of the year and progress in negotiations between the UK and the EUR significantly hampered by the coronavirus outbreak, risks remain firmly tilted to the downside with a hard Brexit or even no deal Brexit remaining distinct possibilities.
by thunderpips
GBP - FUNDAMENTAL DRIVERSFUNDAMENTAL BIAS : BULLISH 1. Virus Situation Regarding the UK's coronavirus outlook, this remains encouraging with the UK's vaccine program having administered at least one dose to over half of the UK population. Given the current success of its vaccine program, the UK is now in the early stages of lifting lockdown restrictions. While the UK's coronavirus outlook is improving, we expect GBP to remain well supported. The biggest risk to this view is the current challenges regarding the AstraZeneca vaccine, which the UK is very reliant upon to reach their vaccination targets. 2. The Monetary Policy outlook for the BOE From the start of the year the BOE had a change of heart regarding negative interest rates when on the 12th of Jan Governor Bailey pushed back against negative rates, and that view was confirmed in the BOE’s meeting on the 4th of February where they firmly pushed back against negative rates. Even though the BOE is nowhere close to hawkish, their less dovish demeanour regarding the overall economic outlook (and unphased approach to rising yields) have seen markets shifting their monetary policy expectations from expecting the next move to be a 10 bsp cut to now expecting the next move to be a hike of 10 bsp. 3. The country’s economic developments Economic data has been better-than-expected despite renewed lockdown measures that was announced at the end of last year. The hopes of a possible faster economic reopening and subsequent recovery has seen both the BOE and IMF upgrade growth projections for the UK economy which has widened the growth differentials between other majors by quite a bit and is something that should continue to be a supportive factor for GBP.
by thunderpips
GBP: Current Sentiment DriversLatest Developments: April 21 – CPI for March increased to 0.7% Y/Y (prior 0.4%) and printed at 0.3% M/M (prior 0.1%). Core CPI increased to 1.1% Y/Y (prior 0.9%) and printed at 0.4% M/M (prior 0.0%). April 20 – The UK’s coronavirus count increased to 4,393,307 cases (+2,524). March 31 – GDP for Q4 printed at 1.3% Q/Q and -7.3% Y/Y, revised from 1.0% and -7.8%, respectively. The report published by the ONS also noted that household savings for the quarter grew to their biggest ever level. This is supportive of recent comments from the BoE, who expect a significant increase in consumer activity once lockdowns are lifted. March 18 – At their March meeting, the BoE kept its official Bank Rate unchanged at 0.10% and its QE programme at £895 billion. The BoE added that they do not intend to tighten policy until there is clear evidence that there is significant progress towards eliminating spare capacity and achieving its 2% inflation goal. Future Sentiment Shifts: There are several risks to GBP’s outlook, particularly with respect to the UK’s coronavirus/lockdown outlook and interest rate expectations. Of these two, expect the UK’s coronavirus outlook to play the more influential role in the short term as the UK’s coronavirus vaccine rollout continues to show signs of stabilizing its breakout, which in turn, should allow the UK to ease lockdown restrictions in the months ahead. However, in the medium term, as the market’s focus shifts, monetary policy should dominate. Regarding monetary policy, risks still remain; although, further easing appears unlikely at this point and markets looking for a hike in 2022. Primary Drivers: Bank of England – Monetary Policy in the UK remains highly influential to GBP’s fundamental outlook. Expectations for policy tightening should prove GBP positive, while expectations for policy easing should prove GBP negative. Brexit – The outlook for the UK’s exit from the EU in December remains a key influence for GBP as it poses significant risks to the UK’s economic outlook. With the UK set to leave at the end of the year and progress in negotiations between the UK and the EUR significantly hampered by the coronavirus outbreak, risks remain firmly tilted to the downside with a hard Brexit or even no deal Brexit remaining distinct possibilities.
by thunderpips