Outlook for Today is Bullish, Cable May Test 1.6260 Soon: Pound Sterling (GBP) Coverage 6/11
The British pound sterling (GBP) remained strong on Wednesday morning, outperforming all the majors after the release of a strong services PMI October print, which jumped to 62.5 and a 16year high. The data keeps coming though; Wednesday saw a slew of industrial and manufacturing data prints being released which underpinned the UK currency further. However, traders then took to the sidelines with an eye for the ECB and BoE interest rate decisions due on Thursday. Follow Thursday's coverage HERE.
Latest Rates:
- The pound to euro exchange rate is 0.13% higher than last night's close at 1.1929.
- The pound to US dollar exchange rate is 0.42 pct up at 1.6113.
- The pound to Australian dollar is 0.2 pct higher at 1.6901.
- The pound to New Zealand dollar exchange rate is 0.03 pct higher at 1.9192.
NB: All quotes here are taken from the spot market. Your bank will subtract a spread at their discretion when passing on a retail rate. Note that an independent FX provider will guarantee to undercut your bank's offer, thus delivering up to 5% more FX. Learn more here.
10:12: Key levels to watch out for
Gareth Berry at UBS gives us his predictions for GBP going forward:
On GBPUSD he says: "The pair has bounced from the critical support at 1.5894, reinforcing the bullish picture. Resistance is at 1.6122 ahead of 1.6260."
On EURGBP: "The recent sell-off has seen the MACD cross below its zero line, this is a bearish condition. The next major support focus is at 0.8333. Resistance is at 0.8477."
10:04: EU retail sales disappoint, EUR/GBP is however supported
The euro is trading firm right across the board today despite some disappointing data just having been released.
Retail Sales (MoM) (Sep) came in at -0.6%, analysts had hoped for -0.4%.
Retail Sales (YoY) (Sep) now stand at +0.3%, expectations were for them to stand at +0.7%.
But as mentioned, the EUR appears unfazed by this. Typical.
09:43: No stopping GBP now
"Ain't no stopping it now - GBPUSD is extending gains above 1.61 after good Sept production. 1.6150 - high from Oct 29th resistance." - Forex.com in the wake of just-released data.
09:30: More strong UK data announced - GBP in fresh boost
The British pound has shot higher following the announcement of yet more strong UK data.
Industrial Production (YoY) (Sep): +2.2%, expected: +1.8%.
Industrial Production (MoM) (Sep): +0.9%, expected: +0.5%
Manufacturing Production (MoM) (Sep): +1.2%, expected: +1.1%.
Manufacturing Production (YoY) (Sep): +0.8%, expected: +0.7%.
08:48: Yield spreads widen - should boost GBP
"The better than expected UK services PMI had a big impact on front end UK yields yesterday, pushing 2 year forward points in GBP/USD to the widest this year. On its own, this suggests some upside risks to GBP/USD, but progress beyond 1.6050 proved tough yesterday, though some further gains were seen overnight." - Lloyds Bank Research.
07:50: GBPUSD may test 1.6260
Concerning the outlook for the Cable, Citibank Wealth Management say:
"GBP surged to the 1.60 level as U.K. Service PMI rose from 60.3 to 62.5 in Oct, the highest since May 1997. GBP Outlook: GBP strength may persist as this week’s BOE meeting may keep its QE scale unchanged.
"Technically, GBP/USD may test higher to 1.6260 gradually, with strong support at 55MA of 1.5932."
07:40: Why is the New Zealand dollar so strong?
The pound has lost ground to the NZ dollar (NZD) overnight; data released this morning showed that New Zealand’s jobless rate fell to 6.2% in the third quarter, down from 6.4% in the previous quarter. Payroll increased 27,000, or 1.2% (QoQ), the most in four year.
The NZD/USD rose 1% to 0.8365 vs the USD, out-performing other major currencies.
Commenting on the news, Citigroup say:
"As recovery in labour market has gained strength in New Zealand, Citi analysts anticipate the RBNZ to raise interest rate in 1Q 2014. Policy rate may reach 3.75% by the end of next year, up from the current 2.5%, which will likely be NZD-positive."
07:35: Great gains vs the Australian dollar
The AUD has lost further ground to the British pound in early Asian trade.
The AUD has suffered after the RBA sounded another warning over the strength of AUD.
With regards to the currency, the statement noted that, "while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy."
07:29: Watch out for data at 09:30
Today currency markets will be looking for data from the manufacturing sector when approaching the British pound sterling (GBP).
Industrial Production (YoY) (Sep): Predicted at +1.8%, Previous was -1.5%.
Industrial Production (MoM) (Sep): Predicted at +0.5%, Previous -1.1%.
Manufacturing Production (MoM) (Sep): Predicted at +1.1%, Previous was -1.2%.
Manufacturing Production (YoY) (Sep): Predicted at +0.7%, Previous was -0.2%.
07:20: GBP puts in a strong performance, but technicals remain in bearish territory
The case for a Buy on GBP/USD is yet to establish itself on a number of longer-term timeframes.
Camilla Sutton at Scotiabank says:
"GBPUSD short‐term technicals are mixed, but like EUR is also leaning towards a more bearish outlook. Most studies are in sell territory and the RSI is just crossing below 50. Support lies at yesterday’s low of 1.5904, while resistance comes in at recent congestion at 1.6070."