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Will Euro Reverse Against the British Pound Post ECB and BoE?Following a surprise hawkish pivot by the European Central Bank as the Bank of England raised rates to 0.50% from 0.25%, EUR/GBP rallied the most since April 2021 this week. With markets already pricing in an aggressive BoE, that may leave room for equivalent ECB bets to catch up ahead. That could leave EUR/GBP tilted higher. The pair also closed at the highest since late December, reinforcing the key 0.8277 - 0.8364 support zone that has been in play since 2016. Even though EUR/GBP has been aiming lower since 2020, a closer look reveals that the pair has been consolidating for over 5 years. This has created a large rectangle where the ceiling lays around 0.9270 - 0.9499. The latest bounce off the floor of the rectangle may open the door to extending gains given confirmation. That would prolong the pair's long-term range-bound trend. Immediate resistance appears to be the 78.6% Fibonacci retracement at 0.8538 before a potential falling trendline from 2020 may come into play. On the flip side, a close under the rectangle floor, with confirmation, may hint at ending consolidating, leaving the pair at risk of extending losses. FX_IDC:EURGBP
by QM_Dubrovsky
Sterling yawns after BoE hikeThe British pound is slightly lower in Friday trading. It has been an excellent week for GBP/USD, which has gained 1.26%. If the pound can maintain these gains during the day, it will mark the currency's best weekly showing since December 2020. As was widely predicted, the BoE raised rates by 0.25% at Thursday's meeting. This brings the key rate 0.50% and was the first back-to-back rate hike since 2004. This didn't make much of an impression on the markets, as the pound rose only slightly after the meeting. What was surprising about the decision was that four of the nine MPC members voted to raise rates by 0.50%, which would have marked the biggest rate hike by the BoE in over 25 years. The large minority shows just how hawkish the BoE has become in recent months. Governor Andrew Bailey stated that the markets should not assume that the BoE planned a series of rate hikes, but it's questionable whether investors will pay close attention to his message. Bailey has a credibility problem after surprising the markets with his rate decisions late last year, and the tight 5-4 vote at the meeting shows significant dissension with regard to BoE monetary policy. The US nonfarm payroll report will be released later today. The report is often the highlight of the trading week, but this time around the markets are more focused on interest rate guidance and next week's US inflation report. The ADP employment report showed a massive loss of jobs, at -301 thousand. This was the sharpest decline since April 2020, when the Covid pandemic started. The markets aren't bracing for a repeat from the NFP, but expectations are low, with a consensus of 150 thousand. GBP/USD faces resistance at 1.3648 and 1.3740 There is support at 1.3522 and 1.3440
by OANDA
GBP/CAD - Jumps as BoC resists raising ratesThe pound has been range-bound against the Canadian dollar for the last week and that remains the case so far today, despite the Bank of Canada holding off on raising interest rates. It had been expected to start the tightening cycle today, with the market's pricing in up to five more over the course of the year after inflation hit a 30-year high and the labour market improved. But with the central bank taking a more patient approach and instead laying the foundations to raise rates in March, once it has a better idea of the Fed's plans, no doubt, the currency has come under some pressure. And expectations for that sixth hike in 2022 have dipped, with it now deemed a coin toss in December. Still a very aggressive start to monetary tightening, of course. As far as the chart is concerned, this still leaves the pair range-bound for now, with the upper end holding firm after the decision. It will now be interesting to see which end fails first, with the BoE also in the business of raising rates, after getting underway in December, with another widely expected next week. A move higher could see the pair quickly run into some resistance around 1.71, where prior support and resistance coincides with the upper end of the SMA bands on the 4-hour chart. A move below the 50 fib, and the range support, could be quite bearish, with support perhaps being seen around 1.6850 and 1.6725-1.6735.
by OANDA
EURGBP Long Idea EURGBP has been in a consistent downtrend since the 8th of December, falling from 0.86. area to the current levels of 0.834. The price has been making lower lows, edging ever so slowly to Feb 06's low of 0.8278. However, it appears that EURGBP has found some support at the current levels, with a retest of 0.838 on the cards. Our in-house view on EURGBP is long on a short-term bias, the RSI indicators on the Daily and 1hr are in oversold conditions which comply with our long bias.
Long
by Orion-Markets
GBPUSD is poised for a breakout GBPUSD is poised for a breakout if BOE sounded hawkish tomorrow. - The Bank’s Monetary Policy Committee meets tomorrow to decide what to do on borrowing costs, which remain at record lows of 0.1%. - If BOE hinted that it may raise rates in first half of 2022, specially after the inflation hit 10 year high in NOV - Inflation at 10-year high puts fresh pressure on the Bank of England - wait for a breakout to buy GBPUSD - place your stop loss at 1.3150
Long
by ChartDepth
EUR/GBP - Key Support HoldingWith both the ECB and BoE meetings now behind us, how do we assess the impact on the currencies and what it means going forward? Interestingly, there were no major surprises on either side. The BoE moved slightly earlier while the ECB tweaked its asset purchases, with the result being that the PEPP comes to an end in March while the support it provided is only slowly phased out over an additional six months. In terms of the technicals, there may also be some interesting takeaways. The spike lower yesterday saw the pair run into support around the 61.8 fib (4-hour chart) before quickly recovering to sit back above the 50 fib and 200/233-period SMA band. This had been key support prior to the meetings and remains so now. If 0.85 holds, it could potentially be a very bullish signal going into the new year. Another failure and the long-term downtrend may continue.
by OANDA
Today’s Notable Sentiment ShiftsGBP/BoE – Sterling jumped to December highs on Thursday after the Bank of England surprised investors by hiking interest rates by 15 basis points, taking the Official Bank Rate to 0.25%, with only Tenreyro dissenting in a vote split of 8-0-1. Commenting on the BoE’s decision, Berenberg noted that “having first guided markets into betting on a rate hike in November, the Bank of England today defied market expectations again by finally pulling the trigger. We expect a further 25 basis point hike in February 2022 to take the bank rate to 0.5%.” Meanwhile, IG added that “the announcement does look like a bit of a panic move – the Bank of England is probably regretting its decision not to move last month when Omicron wasn’t even an issue.” EUR/ECB – The ECB kept interest rates on hold at their December meeting but did announce the end of its pandemic emergency asset-buying scheme, with the central bank looking to begin tapering from March onwards. However, the ECB also promised support as needed via its long-running Asset Purchase Programme, confirmed its relaxed view on inflation, and signaled that any exit from years of ultra-easy policy would be slow.
by thunderpips
10
GBPNZD Long IdeaGBPNZD has just seen a small sell-off towards the levels of 1.9495 however it appears that there has been some support formed here. If the BoE decides to raise interest rates then it's likely for GBPNZD to push forward and test the previous high of 1.97. As the Fed plans more rate hikes in 2022 it's possible for the UK to follow suit, which is why I'm bullish on pound pairs approaching the end of the week. The stop-loss area for this trade is located just below the bottom of the range at 1.93658.
Long
by Orion-Markets
GBPCHF Long IdeaFollowing on from Tuesday's successful GBP CHF analysis, I believe that GBPCHF will re-test the 1.24 levels ahead of the UK's interest rate decision at 1:30 today. Across the pond, the Fed's policy decision regarding a faster taper surged the dollar and indices across the board. It's very likely for the BoE to follow in the Feds path in rising interest rates, if this is the case then Sterling Pairs are likely to surge. If the BoE decides not to increase inflation then this trade could go the other way. However, the price has just broken past the 1.226 resistance zone which provides me with confidence in the direction of this position.
Long
by Orion-Markets
GBP/JPY - Big Test Above We've seen a bit of a recovery in GBPJPY over the last couple of weeks as risk appetite has rebounded in the markets. But how much further can it run? What's helped the move more recently is improving odds on a BoE rate hike on Thursday. It's still widely expected that the MPC will vote against hiking this time and then do so in February when they have a much clearer view on omicron and the economy, but it's now expected to be much closer. A hike could propel the pound higher in the near term and put key resistance under significant pressure. The big test above is 152.50, where the 61.8 fib coincides with recent support, the upper end of the 200/233-day SMA, and the lower end of the 55/89-day SMA. A rotation off here could be a very bearish signal as it would confirm the initial break into bearish territory and suggest the recent correction is just that rather than something more significant. It wouldn't be the first time that the BoE has put off raising rates, despite leading us to believe otherwise. I don't think that would be the case this time though. Rather, they could hike in order to follow through on those warnings and once again catch the market a little off-guard. Either way, with the BoE and BoJ rate decisions to come, among many others, the next couple of days will be action-packed which could bring plenty of volatility.
by OANDA
EUR/GBP - Rally Stalls But Breakout Still PossibleThe euro has been on an impressive run against the pound recently and as you'd expect, the rally stalled around the 200/233-day SMA band. But it may not be over yet. The pair was always likely to see significant resistance here, having done so in the past, but the important thing is what follows next. It's worth noting that the Bank of England and European Central Bank will both announce their latest interest rate decisions on Wednesday, with the latter also providing new economic forecasts and perhaps some insight into what, if anything, will replace the PEPP program in March. This will surely have a huge role to play on where the pair breaks next. With the pair pulling back, the key test below is 0.85, where the December lows coincide with the 50 fib level - November lows to December highs - and the 200/233-period SMA band on the 4-hour chart. A move below here could tip momentum back in the favour of the sellers and see the pair resume its long-term downward trend. If this level holds, we could see another run at last week's highs, and, who knows, the pair could be heading into the new year on a much more bullish note.
by OANDA
1
GBPUSD LONG TO 1.34300GBPUSD has been on a decline for the best part of a year. Bearish momentum has majorly decreased and we have pretty much been ranging for about a month now creating a corrective pattern inside a wedge. I am expecting one final wave (Wave E) down towards the order block of 1.31300-1.31070, before we see a reversal to the upside. I will be looking for a 300 PIP bullish move targeting 1.34300, possibly even higher. I will be catching this move on behalf of myself & my Account Management investors.
Long
by BA_Investments
1
EURGBP: Support break can lead to further losses!EURGBP as seen has likely rejected the long term descending daily trendline and now has eyes to move lower. To confirm this move, the daily candle needs to close below 0.84900 support which would open the door to further drop towards the next support located at 0.83800. The stop loss can ideally be placed above the long term daily descending trendline to achieve 1:1 RISK TO REWARD RATIO. My analysis is not meant to be a trading signal nor financial advice! Its highly advisable to perform your own analysis and trade markets at your own risk. Please LIKE & FOLLOW if you found this analysis helpful in assisting with your own personal analysis. Cheers
Short
by FX618Analysis
EURGBP Long Idea EURGBP has been in an uptrend since late November, just about reaching the 0.86 level. Since the retest of 0.86 the price has fallen by 1%, however, it appears to have just formed support around the 0.85 area. The RSI indicator suggests that the price may rise from here as the levels are extremely oversold, (2). The target of this trade is at the recent near high of 0.86. The stop loss area for this trade is located just below the resistance level of 0.848, at 0.8474.
Long
by Orion-Markets
Pound yawns after data dumpThe British pound has had a rather sleepy week, and the lack of activity has continued in Friday trade, as GBP/USD is hovering at the 1.32 line. It has been a light calendar week for the UK, and today's data dump didn't have any effect on the drifting pound. The GDP report for September came in at 4.6% y/y, well short of the consensus of 6.6%. Manufacturing Production for September y/y slowed to 1.3%, shy of the forecast of 1.7%. Investors shrugged off the underperforming data, perhaps because they are more focused on two burning issues, Omicron and the BoE rate decision next week. Omicron has caused some roller-coaster movement in the financial markets. There was a panic in late November, but risk sentiment than rebounded on reports that the variant was less severe than Delta. The World Health Organisation has said that it will have more data on Omicron in a couple of weeks. Although the symptoms appear to be relatively mild, Omicron is up to four times more contagious than Delta, and that has governments worried. The UK has responded by implementing 'Plan B', which includes some health restrictions, such as wearing masks at public venues. Omicron is spreading quickly across the UK, and it's unclear if Plan B will be enough to control the pandemic. The new health restrictions will likely cut into December/January holiday shopping and stoke inflation, as many shops will raise prices. We can expect a downgrade to Q1 2022 growth forecasts, and the wobbly pound will likely face further headwinds in the New Year. The BoE holds its policy meeting next week, and whether the bank will press the rate trigger remains up in the air. The markets have priced in a 40% likelihood of a rate hike, making this a live meeting which could have a strong impact on the struggling British pound. The Omicron crisis has dampened the likelihood of a rate hike, and it was noteworthy that Michael Saunders, a hawkish member of the MPC, has stated that it may be prudent to hold off until we have more data about Omicron. If the markets have learned anything from last month's shocker, when the BoE didn't raise rates, it is not to make any assumptions when it comes to Andrew Bailey & Company. GBP/USD has support at 1.3161 and 1.3091 There is resistance at 1.3336 and 1.3441
by OANDA
2
Pound lower, retail sales reboundThe British pound is in negative territory in the Friday session. GBP/USD is currently trading at 1.3450, down 0.35% on the day. UK retail sales for October surprised the markets, as the gain of 0.8% m/m was the first gain in five months. Clearly good news, but the improvement could well be due to early Christmas shopping rather than a change in the mindset of consumers, who have been slow to spend since the end of the lockdown in the summer. Consumer confidence has been weak as caution is the mantra in what has been a difficult year. On an annual basis, retail sales fell by -1.6%, which follows a read of -1.1% in September. Inflation continues to accelerate as the "transient" narrative seems out of sync with what is happening on the ground. The UK consumer price index hit 4.2% y/y in October, above the consensus of 3.9%. The data will add to the pressure on the BoE to raise interest rates at the December policy meeting. The bank held rates at the November meeting, which shocked the markets, as Governor Andrew Bailey had sent strong hints that the bank would raise rates in order to contain inflation. The BoE is projecting inflation to go as high as 5% in early 2022 before falling lower in 2023. After being burned by the BoE, investors will be mindful about projecting a December rate hike, but it's clear to everyone that the bank will need to raise rates shortly - if not in December, then early in the New Year. With no tier-1 events out of the US today, the markets are focusing on President Biden's choice for Chair of the Federal Reserve, which should be announced on the weekend. Jerome Powell was considered a strong favourite until recently, but Fed member Laura Brainard could be a surprise choice. Brainard is considered more dovish than Powell and would be expected to raise rates more slowly. If Brainard wins, we could see an immediate reaction from the markets and the US dollar could lose ground. GBP/USD has support at 1.3310. Below, there is support at 1.3206 There is resistance at 1.3562 and 1.3710
by OANDA
Dominant currency sentimentHello Traders! BOE rate outlook continues to improves following uk CPI Heading into todays European trading session, the risk tone is mixed. Asia - Pacific indices are weaker, measures of volatility mixed and safe heavens pressured. Leading Asia-Pacific indices to the downside is the ASX 200 at -0,68% followed by the Topix at -0,61%, the Hang Seng at -0,49 and the Nikkei 225 at -0,40 %. The CSI is positive on the session at + 0,05%. In the FX complex, despite the weakness in equities, It's CHF leading to the downside, with JPY also pressured across the board. USD remains the exception, with the currency remaining supported by FED rate hike expectations. Looking ahead, inflation is likely to remain a theme throughout the day, with EU CPI due to be released in todays European session and Canadian CPI due to be released later today. Have a great day! Regards, Vitez
by Vitezabraham
1
GBPJPY Swing trade + Fundamental driversHello Traders! We approached a significant support zone also having a strong fundamental upside bias. Enter at trend line break or the breakout of the zone. Stops below the zone. Take profit at the highs. Fundamental Drivers Great British Pound (GBP) Fundamental Bias: Weak Bullish 1. The Monetary Policy outlook for the BOE The BoE took a hit to their credibility with their November policy decision when the bank voted 7-2 to keep rates on hold and also had a very clear U-turn among some of the recent hawkish comments from the likes of Bailey and Pill. Going into the meeting markets had fully priced a 15bsp hike in 4Q21, and even though analysts and economists were divided on whether that hike would take place in Nov or Dec the bank’s statement and press conference has now seen market expectations for a hike pushed back to Feb 2022. This came from the bank’s dovish tilt regarding growth, inflation as well as a change or tone which said that hikes would be appropriate in the coming months if the labour data comes in line with the bank’s projections. We were anticipating a violent repricing on med-term rate expectations for the past few weeks now, stressing that rates markets were too aggressively priced, but the U-turn from the bank regarding the near-term was surprising and means incoming labour market data will be key in gauging when lift off will occur. When asked about their obvious U-turn, the bank pushed back and said they won’t endorse market rate pricing, but external member Saunders did just that in early Oct. Overall, the bank delivered a dovish tone, and took a big hit to their credibility, which means markets will be a lot more careful with jumping the gun on their forward guidance going forward. A key reason why we have not changed our outlook for the GBP to bearish after the Nov BoE meeting is because the forecasts for both growth and inflation were conditioned on an implied bank rate of 1% by end 2022, which seems highly unlikely. Thus, after this week’s repricing, if rates price in less than 1% by 2022 then the conditioned path for growth & inflation should be higher again all else being equal. 2. The country’s economic developments The successful vaccination program and subsequent reopening of the UK economy was a big positive for Sterling from the start of the year, but with a lot of those positives already in the price and some expectation of stalling growth, the upward momentum will get tougher in the near- term. Also, alongside the BoE’s dovish tilt incoming economic data will be crucially important for markets to gauge the rate path. This incoming week we have the Sep labour report, and with the BoE’s comments that they want to see what the labour market does before acting on rates it means this print will be important, not as important as the October report we get in Dec but definitely one to watch in the week ahead. 3. Political Developments Even though a Brexit deal was reached last year, some issues like the Northern Ireland protocol remains, and with neither side willing to budge it seems like these issues are here to stay for now. There has been heated rhetoric from both sides with the UK threatening to trigger Article 16 and the EU threatening to terminate the Brexit deal if they do. For now, these are just threats, but any actual escalation could increase the odds of seeing so risk premium built into Sterling. Also keep the fishing challenges with France in mind as well. Japanese Yen (JPY) Fundamental Bias: Bearish 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. With bond yields looking a bit stretched at the current levels any decent mean reversion is expected to be supportive for the JPY, so it remains a key asset class to keep track. Have a great week! Regards Vitez
Long
by Vitezabraham