Pound vs Dollar: "This could be a trigger for a GBP/USD break higher" says forecaster
The British pound to US dollar exchange rate finds itself trading 0.15 pct in the red at 1.6203 in early morning trade in London.
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British pound forecasted higher vs USD
We hear from analysts at Lloyds Bank Research on the next possible trigger for GBP gains which could well be presented this week:
"GBP/USD continues to threaten the highs of the year, helped by the continuing strong run of UK data. The highest CBI orders index since 1995 was the trigger to push UK yields up last week, and 2 year forward points in GBP/USD hit new highs for the year, underlining the potential for GBP/USD to follow it higher.
"This week sees the first revision of UK Q3 GDP, and while this is likely to be unrevised, we see risks to the upside. This could be a trigger for a GBP/USD break higher, but there is already enough positive UK news to justify new GBP/USD highs for the year."
Beware the US dollar rally
The US dollar could be at the beginning of a prolonged period of strength.
Yes, we have suggested this at various stages through the year, but with forecasters increasingly settling on March 2014 as the date the US Federal Reserve will announce it is to taper it's asset buying programme, markets are turning increasingly bullish on the USD.
"According to the latest report from the CFTC, speculators hold the largest amount of long dollar, short yen positions in 6 years," says Kathy Lien BK Asset Management in reference to the insights of the latest CFTC data positioning.
"Positive sentiment toward the USD has continued to build this week at the expense of EUR and JPY as most of the remaining primary currencies were left unchanged," says a note from Scotiabank.
The immediate outlook for the USD
With longer-term forecasts being more bullish on the USD, we ask what of the week ahead?
Today’s Dallas Fed data will consequently probably garner a little more attention than usual in a holiday shortened week in which these regional indicates and US durable goods data are the only US numbers of note.
"At this stage, we still interpret Fed commentary as suggesting that a tapering remains pretty unlikely in December, and while this is the case, and data remains unconvincing, the USD index seems unlikely to extend the early November advance, and a further correction looks increasingly likely," say Lloyds Bank.