Analys från DailyFX
BoE Minutes Rattle British Pound
Talking Points:
– Bank of England unanimous in policy hold; 7.0% Unemployment Rate doesn’t guarantee interest rate hike.
– British Pound initially lower, but steadies and rebounds after BoE Minutes.
– Expect action in both GBPJPY and GBPUSD later today.
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INTRADAY PERFORMANCE UPDATE: 10:45 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.08% (-0.20% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
Weakness in the commodity currencies coupled with strength in the safe havens sees markets around the globe favoring lower yielding, safer assets on Wednesday. The G10 currencies are little changed around the US Dollar overall, with the British Pound the notable outperformer after this morning’s release of the Bank of England’s November meeting Minutes.
British Pound strength wasn’t directly apparent after the BoE Minutes were released, as language within differentiated itself moderately from rhetoric employed just last week. Whereas in the Quarterly Inflation Report the BoE moved up its projection for the Unemployment Rate to hit 7.0% in the 3Q’15 rather than the 3Q’16 (a hawkish policy implication – policy will tighten sooner than anticipated).
Today’s Minutes show that a rate hike isn’t guaranteed once the labor market threshold is hit (a dovish implication – rates will remain lower for longer). Expectedly, the British Pound was unnerved by the more dovish tone employed, and saw brief downside in the wake of the release.
Yet with price recovering soon after across the GBP-crosses spectrum, it’s evident that underlying British Pound strength remains. If further strength for the Sterling is to materialize, it may occur against the Euro and the Japanese Yen in the near-term:
EURGBP Daily Chart: July 3, 2012 to Present
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– The EURGBP has set a lower high after breaking the uptrend from July 2012 (ascending black TL), and price has pierced sideways channel support (grey channel, dating back to January 2013).
– A new descending channel may be emerging (red channel); confirmation below 0.8300.
– Weekly close 0.8300 suggests move into 0.8175/0.8225 by year end.
GBPJPY H4 Chart: September 11, 2013 to Present
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– The GBPJPY remains supported by an uptrend dating back to November 2012, and a more concerted uptrend since April 2013.
– Price has broken out in an ascending triangle since September above 159.75/160.00.
– After breakout last week, on H4 price has consolidated into a potential Bull Flag (context of the bullish breakout).
– H4 close 162.00 gives confidence for continuation into 162.75 and 164.20 over the coming weeks.
Read more: Euro Shrugs Off Rate Cut, Needs Resilient PMIs for Boost Higher
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
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— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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