GBP/USD heads for highest levels of the year - more to come? LIVE coverage 27/11
The key event for the British Pound (GBP) this morning is the UK 3Q GDP readings revision. Will the UK's strong growth be confirmed and thus offer the UK currency further support?
Today's exchange rates
- The pound to euro exchange rate (GBP/EUR): 0.18 pct higher @ 1.1971. The pair remains well anchored around 1.19.
- The pound to dollar exchange rate (GBP/USD): 0.42 pct up @ 1.6281. We will be providing a host of technical views on Cable today.
- The pound to Australian dollar rate (GBP/AUD): 0.52 pct up @ 1.7866. The path of least resistance is higher.
- The pound to New Zealand dollar rate (GBP/NZD): 0.53 pct higher @ 1.9897. NZD remains a difficult prospect for GBP.
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17:00: Can a break above resistance transpire?
GBP/USD remains just above the key resistance at 1.6260.
"In the longer term, given the deep overbought conditions, we continue to see a limited upside potential near the resistance at 1.6260 (01/10/2013 high)." - Luc Luyet at MIG Bank.
16:57: A good day for sterling
"The pound rose to a new 11-month peak against the dollar overnight after the revision to U.K. GDP confirmed the economy grew by 0.8%(q/q) in the third quarter. The strong recovery in Britain’s economy, its fastest quarterly pace of growth in three years, was fuelled by consumer growth and increasing business investment. The figures confirm that the U.K. remains on an improving path of self-sustaining recovery, which has helped push the spread between British gilt yields over German bund yields to an eight-year high last week. The outlook for the BOE to lead both the Fed and the ECB in raising rates continues to underpin the pound." - Omer Esiner at Commonwealth Foreign Exchange.
15:48: Sterling explodes higher in 'massive short squeeze'
Matt Weller at GFT was yesterday tipping the GBP/USD to decline. He was caught out as were many it seems:
"The GBP/USD exploded higher in a massive short squeeze in today’s early European trade. The ostensible catalyst was the U.K. GDP report, which came out generally as expected, but once the pair broke above 1.6250 resistance, a series of stop loss orders were hit (including the one from our previous sell trade), driving the pair up to a new yearly high above 1.6310. As we got to press, the pair is consolidating around the 1.6310 resistance level, but any pullbacks from this ceiling may find support near the key 1.6250 level."
14:00: Next target for GBP?
"Pound continues consolidating. We think, today price may continue growing up to break this consolidation channel upwards. Target of this growth is at 1.6350." - RoboForex.
11:46: Harmonic bearish patterns…
This forecast for Cable comes from ICN Financial. It is dated by a few hours but remains relevant nevertheless:
"The harmonic bearish Crab Pattern remains valid, and the pair is stable below top D around 1.6260, and the pair still did not acquire any of the pattern’s targets.
"At the same time, trading above 13% correction of CD leg weakens the downside move. Linear Regression Indicators are positive and that conflicts with negativity on Stochastic. We will accordingly stay on the sidelines in the European Session waiting for more confirmations."
Click to enlarge.
11:23: EUR/GBP is a sell on upticks
"We keep a sterling positive bias longer term and look to sell EUR/GBP into strength. 0.8300 is the next high profile target on the charts. Probably, there is some high profile news needed to clear this barrier." - Piet Lammens at KBC Markets.
10:03: Year to date high for the pound vs US dollar exchange rate
"Sterling threatening the 1.63 level" - Caxton FX.
09:59: Sterling in strong recovery
Interesting moves in the British pound this morning. The initial post-GDP revision sell-off has been completely reversed.
"UK GDP figures were in line with estimates, however preliminary business investment was below expected rising by 1.4%q/q. This is unlikely to affect the pound too much, and levels should remain around 1.1950." - Sasha Nugent at CaxtonFX.
09:34: GBP/EUR selling off
Unchanged GDP data has proven to be a kick in the teeth for the pound to euro exchange rate. It would seem that markets are biased to positive surprises from the UK economy, and when they don't get it they sell.
09:30: GDP figures unchanged
Absolutely no change to the Q3 figures. Sterling neutral.
Gross Domestic Product (QoQ) (Q3) was confirmed at +0.8%.
Gross Domestic Product (YoY) (Q3) confirmed at +1.5%.
08:54: GBP risks are to the upside
Lloyds Bank Research are part of the pro-GBP club in the approach to the GDP revision due at 09:30:
"The first revision of UK Q3 GDP will be the main focus today, but we don’t expect any revision and without it there is probably not enough reason to see GBP/USD challenge the big resistance in the 1.6240/60 area. Having said this, the risks are probably towards an upward rather than a downward revision, so we still think GBP risks are mainly to the upside. EUR/GBP also looks stuck in a 0.8330-0.8400 range for the moment, and unchanged UK GDP data would make it unlikely that this range will break."
08:45: Sterling to be offered support
"We expect a slightly upward revision to UK 3Q13 GDP, while CBI reported sales are also seen strong, thus potentially offering sterling renewed support today against both the USD and the EU." - UniCredit.
08:30: Upside surprise expected in GDP data, bullish view on GBP
Swissquote Bank say they are anticipating an upside surprise to today's GDP reading:
"While the consensus is +0.8% growth q/q and +1.5% y/y, we believe there is room for surprise given the latest strength in PMI readings. The Cable rallied to 1.6231 in Asia, with large vanilla expiries seen above 1.6185. We keep our bullish view in GBP, and keep our eyes set on 1.6260 (Sep-Oct double top)."
08:28: UK GDP data - what to expect
Gross Domestic Product (YoY) (Q3) Revision: Analysts are predicting a reading of +1.5%, last quarter the yearly growth rate was shown to be at +1.3%.
Gross Domestic Product (QoQ) (Q3) Revision: Expectations are for a reading to come in at +0.8%, last quarter the reading was at +0.7%.