GBP Inches Lower Against US Dollar in Quiet Trade, Vodafone Deal Puts Bid Under GBP/EUR: Rolling Coverage on Thurs 29th Aug
The British Pound Sterling (Currency:GBP) is on the front foot against the Euro on Thursday morning, however an easing of global tensions has seen markets, commodities and emerging market currencies staging a relief rally which has impacted Pound Sterling performance against the ZAR, AUD and NZD. Another key theme today will be whether recent US Dollar strength can be maintained.
Highlights:
09:34: UniCredit favour selling Pound Sterling
11:45: No more easy gains for Sterling
12:48: Vodafone deal gives lift to GBP
17:00: What does Friday the 30th hold for GBP?
The data calendar picks up on Friday, here are the more important releases to consider:
@ 00:01 - GfK Consumer Confidence, expectations are for a reading of -14.
@ 07:00 - Nationwide housing data
@ 09:30 - The Consumer Credit report released by the Bank of England, expectations are for 0.6 BN GBP worth of credit to have been extended for the month of July.
@ 09:30 - Mortgage Approvals data from the Bank of England, consensus forecasts are for a release of 59.000K.
16:50: Month-end rebalancing flows favour US Dollar
Month end is upon us and as money managers account for currency exposure we will start to see the subsequent impact on the currency markets.
According to Yuki Sakasai at Barclays Research this month-end should see US dollar demand:
"The relative underperformance of US asset markets, especially equities, suggests international asset managers are likely overhedged on their USD exposures relative to other currencies. The model output shows a modest/strong USD buy signal across the board."
16:06: Pound's outlook against the Canadian Dollar? Hard to tell
Greg Moore at TD Securities gives his near-term outlook call on the Pound / Canadian dollar exchange rate:
"Hard to know what to make of GBP/CAD price action overall.
"The short-term move up has clearly stalled, the weekly patterns are turning neutral (likely inside range week), which also suggests a broader stall out.
"But the GBP seems unwilling to back off too much from the 1.63 area. Short-term, we may see some further consolidation but if losses are contained, the move up may well resume in the next few weeks."
15:35: GBP/USD inching lower in quiet trade
The Pound / US Dollar exchange rate is trending lower in late afternoon in London.
Matt Weller at GFT gives his views on the immediate outlook for the GBP/USD:
"The GBP/USD bounced back sharply following BOE Governor Carney’s speech yesterday, taking the pair back above the 1.5500 round handle. Since then, the pair has generally consolidated above the 1.5500 with little momentum in either direction.
"Today’s U.S. economic data may inject a bit of volatility, and given the consistent downtrend over the last week and a half, we are looking for sell opportunities on bearish price action in the short-term."
Below: GBP/USD trade following Carney's speech
15:27: MPC should be troubled by GBP reaction to Carney's speech
Geoffrey Yu at UBS gives his insights into the Pound's reaction to Carney's Nottingham speech saying the reaction of GBP should be troubling the MPC… read the insights here.
12:48: Vodafone / Verizon deal helps Pound higher
Boris Schlossberg on the pro-Sterling impact of the Vodafone / Verizon deal:
"The one high beta currency that has held its ground relatively well was the pound on rumors that Vodafone may be in negotiations to sell its 45% stake in Verizon. The deal is reported to be worth up 130B and is pound positive. EUR/GBP slid to 8550 and drop to 8500 if the news is confirmed."
11:45: No more easy gains for Sterling against the Euro
Piet Lammens at KBC Markets believes EUR/GBP has entered a sideways consolidative pattern:
"EUR/GBP has incorporated the recent improvement in the UK eco data. Even so, we think that the downside in sterling has become well-protected.
"The pair is now more or less in the middle of a broad sideways consolidation pattern between 0.8800 and 0.8400. The easy part of the sterling gains against the euro should be over."
09:34: There is still buying interest for GBP versus USD
In response to the view held by UniCredit (@ 09:34) we gear from:
Ipek Ozkardeskaya at Swissquote who says:
"GBPUSD rallied to 1.5553 and consolidated above the 200-dayMA (1.5510) in Asia. The European opening pulled the cable down to 1.5500, yet traders continue to see buying interest at 1.5480/1.5500."
Geoffrey Yu at UBS who says:
"The pair is consolidating and with momentum pointing lower, the risk appears to be more weakness to test the strong support at 1.5373. Resistance is at 1.5573 ahead of 1.5718."
09:34: UniCredit forecasting declines for Sterling
A bearish update from UniCredit today:
"Remarks by BoE Governor Mark Carney yesterday shook sterling, although he did re-affirm the bank’s forward-guidance framework already announced in mid-August.
"We still favour selling cable into rally on prospects of a return towards 1.50 and buying EUR-GBP on dips as we expect a progressive recovery of this cross rate towards 0.87 and above."
08:30: Pound Sterling looking firm
- The Pound to Euro exchange rate is 0.47 pct higher than seen at last night's close, GBP-EUR is now testing 1.17 once more.
- The Pound to US Dollar exchange rate is 0.07 pct lower at 1.5515.
- The Pound to Australian Dollar exchange rate is 0.18 pct lower at 1.7339.
- The Pound to New Zealand Dollar exchange rate is 0.08 pct lower at 1.9899.
- The Pound to South African Rand exchange rate is 0.27 pct lower at 16.0007.
It is important to note that the above are wholesale spot market quotes. Your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here, or use our live rate vs retail rate converter.
08:26: 24 hour recap
The British Pound found support yesterday from a speech by BoE Governor Mark Carney. Many had fretted about what a dovish sounding Carney would do to the UK currency. This dovishness did not come to pass and the Pound Sterling rallied in response.
08:22: Relief for markets and commodity currencies
A theme we are seeing on Thursday morning is the relief rally being staged by the commodity and emerging market currencies. The likes of the South African Rand, Indian Rupee, Aussie Dollar and Kiwi Dollar are all benefiting against the British Pound in the current market conditions.
Shavaz Dhalla at Spreadex gives his views:
"European markets opened firmly today as investors finished taking as much risk out of their portfolios as they could bear.
"However, volumes are once again proving painfully thin as many seem to be adopting a wait-and-see-strategy over whether the West will confirm military intervention in Syria.
"Investors seem to be rattled by reports that energy giants China and Russia have openly expressed their concerns over a military strike whereas the UK and the US have not made a categorical stance regarding their positions.
"Thus, the opportunity for volatility will likely remain until Western nations announce their plan of action, if any, regarding the atrocities which seem to be occurring in Syria.
"Aside from the problems in Syria, investors will also have a host of economic data to grapple with including unemployment figures in Germany as well as second estimates of US GDP.
"The growth figures from the US will likely be scrutinised by investors amidst the context of the supposed tapering of stimulus measures by officials."
08:19: Can US Dollar strength be extended today?
Important day for the US Dollar today.
Kathy Lien at BK Asset Management says:
"Revisions to second quarter U.S. GDP is scheduled for release tomorrow and economists are looing for a sharp upward revision.
"If GDP growth ends up being stronger than initially anticipated, USD/JPY could extend its gains. Jobless claims are also scheduled for release and they are expected to remain low. Fed President Bullard and Lacker will be speaking and between the 2, Bullard is the only voting member of the FOMC."