GBP LIVE on 24/10: Gilt Yields Conspire to Keep UK Currency Under Pressure

british pound today

 

The British pound sterling (GBP) remains under broad-based pressure on Thursday but currency market observers will be watching if key support levels will provide some relief to the selling. It would seem though that we will have to wait until tomorrow's GDP release for any real trigger.

Currency rates:


The pound euro exchange rate is 0.12 pct lower at 1.1720.
The pound dollar exchange rate is 0.05 pct higher at 1.6173.
The pound Australian dollar is 0.46 pct higher at 1.6872.
The pound New Zealand dollar is 0.73 pct higher at 1.9405.

Keep in Mind: The above are inter-bank quotations. Your bank will levy a spread when passing a retail rate; hence why you never get close to the market rate. An independent FX provider will however guarantee to undercut your bank's offer, delivering up to 5% more currency. Find out more here.

 

17:38: Decent rebound for GBP


CaxtonFX:

"Decent rebound from sterling, with GBP/EUR rate back up to 1.1728 after dipping below 1.17."

16:32: Carney ahead!


carney aheadThere is one little hurdle ahead of tomrrow's GDP data - Mark Carney, the Governor of the Bank of England, discusses the core elements of the BoE’s strategy at 5:45 at an event hosted by the FT.

16:20: Big day for GBP tomorrow


On Friday 25th October at 0930 BST/ 0430 ET Q3 GDP will be released for the UK. The market expects a robust 0.8% quarterly growth rate, up from 0.7% in Q2. The annual rate is expected to rise to 1.5% from 1.3%.

 

16:16: Is the US dollar dead?


Kathleen Brooks at Forex.com questions the direction of the US dollar vs the euro and sterling next:

 

 

16:01: An overbought Aus and NZ dollar sharply lower


Great gains for GBP against the AUD and NZD. Concerns over the Chinese economy linger in the background. But, some forecasters saw this coming as the AUD became severely overbought against the US dollar. GBP/AUD continues to be dictated by the AUD/USD rate.

ICN Financial say:

"AUD/USD has extended a classical upside trip; the pair has reversed sharply after placing the top of 0.9757 as seen on the provided daily graph. The reversal candlestick pattern formed yesterday due to touching a hard rock could be the first signal that the short-term top was placed already.

"This outside day was confirmed by closing below SMA 200 and the obvious overbought case appearing on momentum indicators such as RVI 10. In result, we may witness intraday and short-term drops mainly targeting the support zones between 0.9540 and 0.9500, while penetrating them will open the door up towards 0.9320-0.9275 boundaries." AUD/USD chart:

aus dollar falls

15:54:US dollar to gain vs pound during US session


ICN Financial are betting on a fall in GBP/USD in the US trading session:

"The pair failed to stabilise above 1.6265 proving the bearish harmonic Crab Pattern. Therefore, we bet on the

negativity during the U.S. session, as trading below 1.6265 keeps this negative possibility."

 

14:32: GBP flat, but bullish configuration remains


pound dollarEric Theoret at Scotiabank says the configuration of GBP/USD is neutral to bullish:

"GBP is flat, retracing earlier gains on the back of a softer than expected CBI release, failing to match continued strength in EUR. Focus for GBP remains on Friday’s GDP release, with expectations of an acceleration in the pace of growth to 0.8% q/q in Q3 from 0.7% in Q2.

"GBP bound within one month range, with lower end around 1.5900 as upper end of range lies just above 1.6250. Momentum indicators are neutral to mildly bullish, as both short and medium term trend indicators are suggestive of continued upside."

14:28: Good news for the services industry


The Food and Drink Federation (FDF) has reported that business optimism amongst UK food and drink manufacturers has reached the highest levels seen since 2010.

FDF's Business Snapshot shows Q3 2013 sales strengthened in both domestic and international markets. Findings reveal a sector confident of continued sales growth in Q4.

 

13:22: Yet more upside ahead for EUR/GBP?


"After a minor pullback, the pair is pushing back towards the 61.8 retracement level at 0.8530, as the recent bullish wave continues to be intact. Thus, the bullish scenario remains favored, and a break above the aforementioned resistance should confirm further upside." - ICN Financial.

more upside for eur gbp rate

 

11:45: Pound may reach a new maximum


A note from the team at RoboForex backs fresh highs for GBP/USD:

"The pound is still forming a continuation pattern. We think, today the price may grow up to reach the level of 1.6300, test the pattern from above, and then move upwards again to reach a new maximum."

pound heads for new maximum

 

11:00: Time for Draghi to get aggressive on the Euro?


draghi should act on strong euroThe euro sunk in response to the below-par data released today. However - it is back with a vengeance come late morning. There is just no holding the shared currency back it would seem!

But, Boris Schlossberg at BK Asset Management reckons the big boys at the ECB may be forced to act against this strength:

"Up to now the ECB has been remarkably nonchalant about the strengthening of the euro, but Mario Draghi may change his tone at the next month's press conference if the central bank forecasts suggest the recovery is in danger of faltering.

"Many analysts have pointed out that part of the reason for euro's strength has been the fact that the ECB has quietly but steadily shrunk its balance sheet while the other G-3 central banks continue to expand theirs. Therefore it will interesting to see if Mr. Draghi assumes a much more aggressively accommodative posture at the next month's meeting."

10:04: Bias remains to the upper side


ipek"GBPUSD hit 1.6223; the next key levels are placed at 1.6260 (month double top) and 1.6277 upper-Bollinger band. The bias is on the upside ahead of the third quarter GDP reading due tomorrow." - Swissquote Research analyst Ipek Ozkardeskaya.

09:03: Further relief for GBP/EUR


eurozone pmi fail to impress The pound euro rate is now 0.13 pct up on last night's close at 1.1743.

Provisional Composite Eurozone PMI data has weighed on the EUR halting its rally.

Manufacturing PMI came in at 51.3, analysts had expected 51.4.

Services PMI came in at 50.9, well below the 52.4 expected.

08:48: A tiny bit of relief for GBP/EUR


Some underwhelming PMI data from Germany has halted the rampant euro.

German Services PMI came in at 52.3, below expectations for 53.9. Composite Eurozone PMI is due at the top of the hour.

08:20: The outlook from UBS


UBS outlook for GBP/USD:

"Initial resistance is at 1.6260. A break through which would open the way to the
critical 1.6381. Support is at 1.6116."

For EUR/GBP: "The recent recovery saw the cross close above 0.8500. This indicates scope for a prolonged recovery to 0.8551 and then 0.8603. Support is at 0.8484 ahead of 0.8431."

08:17: Euro/sterling to be driven by EMU PMI + Industrial Trends


cbi industrial trendsToday, we look out for the advance reading of the EMU PMI’s and for the CBI industrial trends orders and Quarterly business optimism. The picture for the EMU PMI’s might be mixed with the a strong report from the manufacturing sector but less buoyant services.

"In global, we don’t expect the report to be really negative from the euro. CBI business optimism is expected to improve further from 7 to 17 and orders are also expected slightly higher from last month." - Piet Lammens @ KBC Markets.  

08:12: GDP, CBI Industrial Trends have the potential to move GBP


Today’s CBI industrial trends survey may provide some positive UK news, but tomorrow’s GDP data seems more likely to be the next trigger for an independent GBP move.

08:04: Gilt yields keep sterling under pressure


gilt yields keep sterling under pressureLloyds Bank Research tell us that the performance of UK sovereign bonds are one of the key drivers of recent sterling weakness:  

"GBP underperformance against the EUR in the last couple of days while the USD has weakened appears to be related to the decline in UK short end yields over the last few sessions, which has been larger than the declines seen in the Eurozone, and even in the US.

"The market is now once again pricing the first UK rate hike in July 2015 – around the same time as the first move in the US. For now, it seems difficult for the market to move UK rate hike expectations ahead of those in the US, and while this is the case it is likely to be difficult to breach the 1.6260 high in GBP/USD."