Analys från DailyFX
UK Growth Rate Accelerating but GBP/USD Profit Taking May Begin
Talking Points:
– UK fastest quarterly growth since June 2010, fastest yearly growth since 1Q’11.
– European currencies slip from recent highs – EURUSD near $1.3800, GBPUSD near $1.6200.
– Final US event risk for the week with two important data prints.
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INTRADAY PERFORMANCE UPDATE: 09:40 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): 0.00% (-0.22% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The UK economy grew by +0.8% q/q in the 3Q’13 and +1.5% y/y, yet signs of accelerating growth over the course of 2013 have done little to boost enthusiasm for the British Pound. At the time this report was being written, the GBPUSD was only up by +0.02% on the day and had started to fade the initial gains seen after the GDP report was released, suggesting that a near-term top in sentiment may have been reached.
GBPUSD 5-minute Chart: October 25, 2013 Intraday
Indeed, with the actual figures hitting their forecasts on the nose, upside was limited in the wake of the release and the GBPUSD came under pressure within the first several minutes. In context of a moderating flow of UK economic data over the past two months – the Citi Economic Surprise Index has declined to 41.90 today from a yearly high of 113.30 on August 13 – there may be few buyers left at these levels.
GBPUSD Daily Chart: May 2013 to Present
A look at the GBPUSD daily chart may suggest a similar near-term outcome. The GBPUSD recently traded back at the top of its 4Q’13 highs below $1.6250, and the reaction to today’s UK GDP data failed to produce a piercing of said highs.
Accordingly, the last time price attempted to pierce these levels in early October, successive failures coinciding with a turn in the daily Slow Stochastics (5,3,3) led to a pullback to the rising trendline off of the July and October lows. Should incoming US economic data today ‘weather the storm’ – Durable Goods Orders (SEP) and U. of Michigan Consumer Confidence (OCT F) both offer elevated event risk – a turn lower in GBPUSD may begin.
A drop lower may be limited, however, with the Federal Reserve’s policy meeting next Wednesday, in which it is widely expected that QE3 will be left on hold at $85B/month. This also may pave the way for QE3 to continue into 2014. Accordingly, we believe that near-term support on the rising midyear TL is likely to hold near 1.6000/30 over the coming days.
Read more: US Dollar Drops as September NFPs Miss – EUR/USD Hits Fresh 2013 High
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.
— 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.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
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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