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GBP/USD Faces Pressure Amid Israel-Hamas Conflict and Economic..GBP/USD Faces Pressure Amid Israel-Hamas Conflict and Economic Challenges The Pound Sterling (GBP) experienced a downturn, dropping below 1.22 against the US Dollar (USD) as geopolitical tensions escalated due to the Israel-Hamas conflict. This development has contributed to a risk-averse market sentiment, impacting the GBP's performance. Additionally, the UK faces economic challenges, particularly in its manufacturing and construction sectors, as higher mortgage rates create uncertainty. Geopolitical Tensions Weigh on GBP: The GBP/USD pair saw a significant decline on Monday as the Israel-Hamas conflict heightened the risk-aversion theme in the market. This geopolitical tension, which began over the weekend, added pressure to the Pound Sterling. Investors are closely monitoring the situation as it unfolds, as it has implications for market sentiment and risk appetite. UK Economic Challenges Persist: Apart from the geopolitical concerns, the UK is grappling with economic challenges. The manufacturing and construction sectors are currently vulnerable due to higher mortgage rates, which have impacted demand and borrowing costs. As a result, UK businesses are cautious about raising funds, leading to reduced labor demand and overall economic output. The situation is expected to persist, with the Bank of England (BoE) committed to maintaining restrictive interest rates until inflation reaches its target of 2%. US Jobs Data and Fed Expectations: In contrast to the UK, the United States is experiencing a more robust economic outlook. The latest US Nonfarm Payrolls (NFP) report, released on Friday, revealed the addition of 336,000 jobs in September, surpassing market estimates. This data reaffirms expectations for at least one more interest rate hike by the Federal Reserve (Fed) before the year-end. The prospect of higher interest rates has boosted US Treasury bond yields, providing support to the USD. However, it's worth noting that wage growth remained moderate during the same month, alleviating some concerns about inflationary pressures. This development may allow the Fed to adopt a less hawkish stance, depending on upcoming economic data and events. Looking Ahead: Investors are closely monitoring key events this week, including the release of the Federal Open Market Committee (FOMC) meeting minutes and US consumer inflation figures. These releases will provide insights into the Fed's future policy decisions and influence the USD's trajectory, subsequently impacting the GBP/USD pair. Furthermore, expectations that the Bank of England (BoE) will maintain its current interest rates in November are likely to limit significant upside potential for the British Pound (GBP). As geopolitical tensions persist and economic challenges persist in the UK, the GBP/USD pair remains under scrutiny by traders and investors. Our preference Short positions below 1.23075 with targets at 1.21100 & 1.2005 in extension.
Short
by FOREXN1
12
GBP/USD Consolidates Gains Ahead of Key US NFP ReportGBP/USD Consolidates Gains Ahead of Key US NFP Report The GBP/USD pair is currently treading water in the Asian session, consolidating its recent robust recovery from the 1.2035 area, which marked its lowest level since March 16 earlier this week. With traders on the sidelines, the focus is firmly on the impending release of the US Nonfarm Payrolls (NFP) report, a pivotal event that could significantly influence market sentiment and currency movements. NFP's Influence on Market Expectations The NFP report, widely watched by investors, carries significant weight in shaping expectations regarding the Federal Reserve's (Fed) future interest rate decisions. The outcome of this report is expected to impact the US Dollar (USD) and provide fresh direction to the GBP/USD pair. Forecasts suggest that the US economy likely added 170,000 jobs in September, a modest decline from the 187,000 reported in August. Simultaneously, the jobless rate is expected to dip from 3.8% to 3.7% for the reported month. A Stronger NFP Report's Implications A stronger NFP report, while indicating healthy job growth, may exert upward pressure on wages and inflation. This scenario could compel the Fed to maintain its hawkish stance and keep interest rates higher for an extended period. Such an outcome could provide renewed strength to the USD and potentially cap the GBP/USD pair's gains. Mixed Labor Market Data As traders brace for the NFP release, it has been a week marked by mixed labor market data. The monthly Job Openings and Labor Turnover Survey (JOLTS) report for August showed higher-than-expected job openings, while private payroll numbers from the Automatic Data Processing (ADP) report fell short of market expectations. Additionally, Thursday's data revealed a slight increase in Weekly Jobless Claims compared to the previous week, albeit slightly below expectations. Overall, these figures align with expectations of robust economic growth in the US for the third quarter. Furthermore, several Fed officials have voiced support for at least one more 25 basis points rate hike by year-end. Divergent Fed-BoE Policy Expectations The prospects of further policy tightening by the Fed have kept US Treasury bond yields elevated and supported the USD. This has contributed to halting the corrective pullback in the USD this week, despite its strong performance year-to-date. In contrast, market expectations are leaning towards the Bank of England (BoE) leaving interest rates unchanged at its upcoming November meeting. This divergence in central bank policies further acts as a restraint on the GBP/USD pair's upside potential. Waiting for Confirmation Given the prevailing market dynamics and uncertainties, traders are exercising caution and waiting for strong follow-through buying before confirming that GBP/USD has established a near-term bottom. Such confirmation would set the stage for a potential extension of the recent robust recovery that has spanned the last two trading days. Conclusion The GBP/USD pair is consolidating its recent gains as traders await the crucial US Nonfarm Payrolls report. This release carries substantial implications for both the USD and GBP, with the potential to influence market expectations regarding future monetary policy decisions. While the current market outlook is cautiously optimistic, the NFP's outcome will likely determine the short-term direction of the GBP/USD pair. Our preference Short positions below 1.23075 with targets at 1.2110 & 1.2005 in extension.
Short
by FOREXN1
21
GBP/USD Rebounds Slightly Amid Weaker Dollar,But Challenges LoomGBP/USD Rebounds Slightly Amid Weaker Dollar, But Challenges Loom The GBP/USD currency pair has shown modest gains, trading above the mid-1.2100s during the Asian session on Thursday. However, the pair's upward momentum remains relatively limited, as it grapples with a series of challenges and uncertainties. In this article, we'll explore the factors influencing the GBP/USD exchange rate and the hurdles it faces in its quest for sustained growth. Weaker US Dollar Boosts GBP/USD The recent rebound of the GBP/USD pair can be attributed, in part, to the softer US labor market data, which has weighed on the US Dollar (USD). Automatic Data Processing (ADP) reported that US private payrolls for September rose by only 89,000, a significant drop from the previous reading of 180,000 and falling short of the market expectation of 153,000. This figure marked the lowest level seen since January 2021, weakening the USD. Pound Sterling's Struggles While the GBP/USD pair has experienced a modest recovery, the British Pound Sterling (GBP) faces several headwinds. These challenges have limited the currency's ability to extend its gains. Weak Economic Data: Despite a slight improvement, the UK Services PMI remains below the critical 50.0 threshold, indicating a contracting economy. The UK economy is grappling with the aftermath of higher interest rates imposed by the Bank of England (BoE), rising oil prices, and supply chain disruptions stemming from the Russia-Ukraine conflict. Inflation Concerns: The UK, like many other countries, is contending with the specter of inflation. The BoE has been faced with the difficult task of managing rising prices while simultaneously fostering economic growth. The central bank's Governor, Andrew Bailey, remains confident in his commitment to bringing down inflation to 5% or below by the end of the year. Economic Slowdown: The UK economy is approaching a slowdown due to various factors, including fragile economic activities, potential inflation shocks, and weakening demand. These challenges have raised concerns about the nation's economic prospects in the near term. Conclusion The GBP/USD pair's recent rebound is underpinned by a weaker US Dollar following softer labor market data. However, the Pound Sterling faces a series of challenges that limit its ability to extend gains. Weak economic data, inflation concerns, and an impending economic slowdown pose significant hurdles for the UK's currency. Traders and investors will closely monitor developments in the UK's economic landscape, central bank policies, and global market dynamics for clues about the future direction of the GBP/USD exchange rate. In the midst of these challenges, the currency pair remains in a state of flux, requiring careful consideration and strategy for those engaging in forex trading. Our preference Short positions below 1.22050 with targets at 1.2005 & 1.1900 in extension.
Short
by FOREXN1
8
GBP/USD Consolidates Near Multi-Month Low Amid Divergent...GBP/USD Consolidates Near Multi-Month Low Amid Divergent Central Bank Policies The GBP/USD currency pair finds itself trapped in a tight trading range, hovering near multi-month lows reached just recently. While the extremely oversold Relative Strength Index (RSI) on the daily chart may deter bearish traders from piling on, a fundamental tug of war between the Federal Reserve (Fed) and the Bank of England (BoE) keeps the pound-dollar pair in check. In this article, we'll delve into the key factors driving the GBP/USD consolidation and explore what the future may hold for this currency pair. Fed vs. BoE: A Divergent Policy Outlook One of the primary drivers behind the recent weakness in the GBP/USD exchange rate is the divergence in monetary policies between the two central banks. The Fed, facing persistent inflationary pressures and a robust economic recovery, has signaled its intention to continue tightening monetary policy. This stance has been instrumental in maintaining elevated US Treasury bond yields, bolstering the US Dollar's status as a safe-haven currency, and subsequently weighing down the pound. On the flip side, the BoE's unexpected decision to keep its policy rate unchanged in September has had a dampening effect on the British Pound. The central bank's cautious approach reflects concerns over the UK's economic prospects and sticky inflation. With UK inflation still significantly above its 2% target and recessionary risks looming, the BoE has hesitated to raise interest rates further. This hesitation, in turn, has acted as a headwind for the GBP/USD pair. Brexit Uncertainties Linger Apart from monetary policy divergence, the shadow of Brexit continues to cast a long shadow over the British economy. The complexities of the UK's new trading relationship with the European Union and ongoing uncertainties surrounding the Northern Ireland Protocol have weighed on business sentiment and trade. These factors have contributed to the prolonged economic headwinds facing the UK. Economic Challenges for the UK The economic challenges facing the UK are further highlighted by dismal manufacturing and services data. After more than a year of contraction in the Manufacturing PMI, the Services PMI is predicted to remain below the 50.0 threshold for a second consecutive time. British producers have been cutting back on new orders and labor due to tepid demand, further undermining the prospects for economic recovery. Additionally, rising oil prices and ongoing supply chain disruptions have added to the woes, potentially pushing the UK economy further into a difficult position. As the GBP/USD pair hovers near multi-month lows, the market continues to reflect the divergent monetary policy outlooks of the Federal Reserve and the Bank of England. The Fed's willingness to tighten policy amid inflation concerns has boosted the US Dollar, while the BoE's caution due to economic uncertainties has weighed on the British Pound. With Brexit uncertainties and economic challenges in the UK, the road to recovery remains uncertain for the pound-dollar pair. Traders and investors will closely watch central bank decisions and economic data releases for clues about the future direction of the GBP/USD exchange rate. Our preference Short positions below 1.22050 with targets at 1.2005 & 1.1900 in extension.
Short
by FOREXN1
13
📈GBPUSD analysis, Weekly insight into price behavior📉FX:GBPUSD OANDA:GBPUSD Hello Traders, please check out my previous ideas. If the Pound stabilizes above the weekly Bollinger midline, the bearish scenario won't be fellfield. In the bearish scenario, the price can fall to the yellow zone. ✌💥If you are satisfied with my analytical content, please share my ideas💥✌ ✍🐱‍👤Otherwise, make sure you leave comments and let me know what you think.🐱‍👤✍ 🤑🍾Thank you for your support. I hope you will gain profit by following my analyses.🍾🤑 CrazyS✌
Short
by CrazyS
2
GBPUSD - AnalysisReexamination & Unsuccessful Attempt at the Daily Resistance Point 1.2620. Monitoring the price thresholds on both the daily and 15-minute charts of GBPUSD. The price has surged back towards the significant daily resistance mark at 1.2620. 1.2620-31 signifies the daily resistance threshold coupled with the 79% Fibonacci retracement level. We are keeping a vigilant eye on the possibility of the price surging and then encountering failure around this intraday resistance zone, which could lead to a subsequent downtrend, with a target set at the daily support level of 1.2544.
Short
by Blackerberg
📈GBPUSD analysis, Weekly insight into price behavior📉FX:GBPUSD FOREXCOM:GBPUSD Hello Traders, please check out my previous ideas. This is my first analysis on GBPUSD daily. If the Pound stabilizes above the yellow zone (crossing the weekly Bollinger midline), the price can climb up to the 1.30 level. In the opposite scenario, if the price does not follow the conditions of the previous scenario, the price can fall to around 1.2626. ✌💥If you are satisfied with my analytical content, please share my ideas💥✌ ✍🐱‍👤Otherwise, make sure you leave comments and let me know what you think.🐱‍👤✍ 🤑🍾Thank you for your support. I hope you will gain profit by following my analyses.🍾🤑 CrazyS✌
Long
by CrazyS
2
GBPUSD July 31st, 2023GBPUSD pair has been on an upward trend since the end of 2022, as indicated by the rising trendline. This trendline acts as a support line, where prices have bounced higher. Since March, a rising wedge pattern has formed, represented by the blue area on the chart. A rising wedge pattern typically signals a potential reversal in the trend. In this case, there was a breakout of the resistance area, to be cautious as the false breakout might still be within a tolerance range, and support breakout confirmation is needed to validate the pattern. Another crucial observation is the trading volume, which has been declining despite the continuous price rise since the end of last year. This lack of interest in trading GBPUSD indicates that many traders find it relatively expensive, leading to reduced participation in the market. Now, let's consider the potential price targets: Target 1: 1.24 This level represents a stable price, and it is likely seen as a significant target, possibly because it is the highest price seen at the beginning of the year. Traders might aim for this level in anticipation of a potential price stabilization or a short-term retracement. Target 2: 1.18 Target 2 represents the lowest price seen at the beginning of the year. If the rising wedge pattern is confirmed and the prices break down below the support provided by the trendline, traders may consider this level as a possible downside target. Target 3: 1.11 This is the last target mentioned and could be another level to watch if the bearish sentiment intensifies. However, it's important to note that this target is quite close to Target 2, and both of these levels may present strong psychological and technical support zones.
Short
by DNP-FX
EUR GBP - FUNDAMENTAL ANALYSISCurrency Markets on UK Recession Watch - There has been high volatility in the Pound to Euro (GBP/EUR) exchange rate during the past week. GBP/EUR posted a fresh 9-month best conversion at 1.1735 early in the week before a slide to below 1.1600 after the Bank of England (BoE) policy decision. Weaker than-expected Euro-Zone data helped strengthen GBP/EUR to 1.1700 on Friday. Both the ECB and Bank of England will want to maintain a hawkish policy stance. Evidence on economic strength is likely to be a key element in the short term. Aggressive BoE Action to Fight Inflation The latest UK inflation data recorded an unchanged headline rate of 8.7% while the core rate increased to 7.1% from 6.8%. The Bank of England (BoE) increased interest rates by 50 basis points to 5.0% this week as it looks to bring inflation under control. The UK 2-year yield has increased to a fresh 15-year high of 5.15%. Following the BoE move, investment banks have raised their rate forecasts. JP Morgan, for example, now expects that rates will be increased to 5.75%. The bank added; “This new policy rate level in our forecast recognizes that there is a dynamic between wage and prices that needs to be stopped and assumes the BoE will need to hike further in order to trigger a significant weakening in the labour market.” High yields will provide an element of support to the Pound, especially with short-term yields comfortably above longer-term rates. According to ING; “From a currency perspective, a sharply inverted yield curve can work as a positive factor for a reserve currency like the pound (as opposed to growth-sensitive currencies). We suspect that a rebound to 0.88 in EUR/GBP(1.1360 for GBP/EUR) will need to be delayed on the back of that.” Commerzbank is still not confident that the BoE has got a grip on inflation. According to the bank; “So the impression remains of a central bank that was too slow in starting to hike its key rate and moved to smaller rate steps too early, even signalling a possible pause. The BoE seems to be chasing inflation developments rather than fighting them with an active monetary policy, which is damaging for Sterling. It added; “As we do not believe that the BoE will suddenly take a different approach, we remain sceptical for Sterling.” UK Economic Fears Liable to Increase The latest UK PMI business confidence data recorded a decline in the manufacturing index to a 6-month low of 46.2 for June from 47.1 previously and below consensus forecasts of 46.8. The services-sector index also retreated to a 3-month low of 53.7 from 55.2 and below expectations of 54.8. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “while the June survey reveals the economy to be cooling as a result of higher interest rates, the stubbornly elevated price growth in the service sector suggests the Bank of England will consider its fight against inflation as still a work in progress. However, such rate hikes will clearly add further to the likelihood of a recession later in the year, which is looking increasingly inevitable as collateral damage in the fight against inflation.” According to TD Securities; “Rates are reaching a point where they will have a negative impact on growth, which is feeding back into a weaker currency.” The bank expects that the economy will suffer; “We now expect three more 25 bps hikes in Bank Rate, taking it to 5.75% in November. As policy tightening catches up to the real economy, a recession is likely to emerge this winter, with cuts coming in Bank Rate from February 2024.” It adds; “The 50 bps hike plays well into our EUR/GBP topside view, where we could see a push towards the top-end of the recent range back near 0.89 in the months ahead.” (1.1235 for GBP/EUR). Euro-Zone Unease Intensifies The latest Euro-Zone PMI business confidence data recorded a decline in the manufacturing index to a 37-month low of 43.6 for June from 44.8 the previous month and compared with an unchanged reading for the month. The services-sector index also retreated to a 5-month low of 52.4 for the month from 55.1 previously and well below expectations of 54.5. The data will reinforce near-term unease surrounding the Euro-Zone outlook. At this stage, the ECB has maintained a hawkish policy stance and is expecting to increase interest rates further at the July policy meeting. As Euro-Zone inflation declines, it is likely that the real interest rates will increase and potentially move into positive territory. If UK inflation is stubborn, real UK rates will remain low and potentially negative. In this context, Danske Bank notes; “On balance, we continue to see relative rates as a positive for EUR/GBP from here, which is one of several reasons behind our fundamental predisposition of buying EUR/GBP dips. We highlight that whether the aggressive BoE market pricing will subside or inflation continues to surprise, we see it as headwinds for GBP.” It has a 6-month GBP/EUR forecast of 1.1360. Berenberg still has an end-2023 GBP/EUR forecast of 1.1765.
Long
by thunderpips
17
EUR GBP - FUNDAMENTAL ANALYSISCurrency Markets on UK Recession Watch - There has been high volatility in the Pound to Euro (GBP/EUR) exchange rate during the past week. GBP/EUR posted a fresh 9-month best conversion at 1.1735 early in the week before a slide to below 1.1600 after the Bank of England (BoE) policy decision. Weaker than-expected Euro-Zone data helped strengthen GBP/EUR to 1.1700 on Friday. Both the ECB and Bank of England will want to maintain a hawkish policy stance. Evidence on economic strength is likely to be a key element in the short term. Aggressive BoE Action to Fight Inflation The latest UK inflation data recorded an unchanged headline rate of 8.7% while the core rate increased to 7.1% from 6.8%. The Bank of England (BoE) increased interest rates by 50 basis points to 5.0% this week as it looks to bring inflation under control. The UK 2-year yield has increased to a fresh 15-year high of 5.15%. Following the BoE move, investment banks have raised their rate forecasts. JP Morgan, for example, now expects that rates will be increased to 5.75%. The bank added; “This new policy rate level in our forecast recognizes that there is a dynamic between wage and prices that needs to be stopped and assumes the BoE will need to hike further in order to trigger a significant weakening in the labour market.” High yields will provide an element of support to the Pound, especially with short-term yields comfortably above longer-term rates. According to ING; “From a currency perspective, a sharply inverted yield curve can work as a positive factor for a reserve currency like the pound (as opposed to growth-sensitive currencies). We suspect that a rebound to 0.88 in EUR/GBP(1.1360 for GBP/EUR) will need to be delayed on the back of that.” Commerzbank is still not confident that the BoE has got a grip on inflation. According to the bank; “So the impression remains of a central bank that was too slow in starting to hike its key rate and moved to smaller rate steps too early, even signalling a possible pause. The BoE seems to be chasing inflation developments rather than fighting them with an active monetary policy, which is damaging for Sterling. It added; “As we do not believe that the BoE will suddenly take a different approach, we remain sceptical for Sterling.” UK Economic Fears Liable to Increase The latest UK PMI business confidence data recorded a decline in the manufacturing index to a 6-month low of 46.2 for June from 47.1 previously and below consensus forecasts of 46.8. The services-sector index also retreated to a 3-month low of 53.7 from 55.2 and below expectations of 54.8. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “while the June survey reveals the economy to be cooling as a result of higher interest rates, the stubbornly elevated price growth in the service sector suggests the Bank of England will consider its fight against inflation as still a work in progress. However, such rate hikes will clearly add further to the likelihood of a recession later in the year, which is looking increasingly inevitable as collateral damage in the fight against inflation.” According to TD Securities; “Rates are reaching a point where they will have a negative impact on growth, which is feeding back into a weaker currency.” The bank expects that the economy will suffer; “We now expect three more 25 bps hikes in Bank Rate, taking it to 5.75% in November. As policy tightening catches up to the real economy, a recession is likely to emerge this winter, with cuts coming in Bank Rate from February 2024.” It adds; “The 50 bps hike plays well into our EUR/GBP topside view, where we could see a push towards the top-end of the recent range back near 0.89 in the months ahead.” (1.1235 for GBP/EUR). Euro-Zone Unease Intensifies The latest Euro-Zone PMI business confidence data recorded a decline in the manufacturing index to a 37-month low of 43.6 for June from 44.8 the previous month and compared with an unchanged reading for the month. The services-sector index also retreated to a 5-month low of 52.4 for the month from 55.1 previously and well below expectations of 54.5. The data will reinforce near-term unease surrounding the Euro-Zone outlook. At this stage, the ECB has maintained a hawkish policy stance and is expecting to increase interest rates further at the July policy meeting. As Euro-Zone inflation declines, it is likely that the real interest rates will increase and potentially move into positive territory. If UK inflation is stubborn, real UK rates will remain low and potentially negative. In this context, Danske Bank notes; “On balance, we continue to see relative rates as a positive for EUR/GBP from here, which is one of several reasons behind our fundamental predisposition of buying EUR/GBP dips. We highlight that whether the aggressive BoE market pricing will subside or inflation continues to surprise, we see it as headwinds for GBP.” It has a 6-month GBP/EUR forecast of 1.1360. Berenberg still has an end-2023 GBP/EUR forecast of 1.1765.
Long
by thunderpips
7
EUR GBP - FUNDAMENTAL ANALYSISBNP Paribas 2023-2024 Exchange Rate Forecasts Euro Can Secure Capital Inflows The bank maintains a broadly constructive stance towards the Euro. It expects that the ECB rate hikes and quantitative tightening will encourage foreign inflows and domestic repatriation. Although BNP expects that energy prices will strengthen, it does not expect a return to 2021 levels. Overall, the bank expects gradual EUR/USD gains over the medium term. Pound Vulnerable on Weak UK Fundamentals BNP expects that the Bank of England (BoE) will have to increase interest rates further, but does not consider that market expectations of rate hikes to 5.75% will be met which will sap currency support. It also considers that the BoE is in a no-win situation. Even if the central bank continues to raise rates, BNP also expects that market confidence in Sterling would suffer to the perception of a long-term inflation problem. It adds; “Both of these developments would be GBP-negative, in our view.” The bank also maintains a negative stance on UK fundamentals. It adds; “We expect GBP to remain structurally weak due to UK growth underperforming its peers, remaining below-trend, and its persistent current-account deficit that requires foreign funding.” Overall, BNP expects that the Euro to Pound (EUR/GBP) exchange rate will trade close to 0.88 during the forecast period.
Long
by thunderpips
3
GBPUSD Approaching the weekly trend ahead of CPI data.Dear Traders, I'd like to bring your attention to the current market conditions of GBPUSD. It is currently experiencing a downtrend but is undergoing a correction phase. The price is approaching a significant resistance zone at 1.26100, which coincides with the major trend. This area is worth monitoring closely. In addition, it's crucial to take into account the upcoming Consumer Price Index (CPI) release this week. This economic indicator is expected to have a substantial impact on the strength of the US dollar and may provide insights into the future actions of Fed Chair Powell. If the CPI figures are higher than anticipated, it suggests that the Fed may need to continue raising interest rates, which could strengthen the dollar further. On the other hand, if the CPI falls below expectations, it is more likely that the Fed will postpone any rate hikes in their next monetary policy decision. Remember to prioritize risk management and trade with caution. Best regards, Joe
Short
by JoeChampion
43