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Tag: GBPJPY

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Sterling Digest, May 7 2013: April tops, May bottoms

GBPUSD 1 WEEK CHART
May selloffs

Cable ended April hitting the 50% Fibonacci retracement level to the PIP. Pretty impressive for a 30-day rally. As $GBPUSD tops out at 1.5606, it begins the 1st week of May with a lower high (as of this writing). Seasonality trends would have traders note that cable has topped out in April each of the last 3 years. In May 2010, cable was below 1.55 and fell to brand new long-term lows by the end of the month. $GBPUSD finds itself in a similar situation with price action only 40 pips above 1.5500. This week’s BoE rate decision will be closely watched thanks to the RBA’s long-awaited interest rate cut. Most still think the BoE holds policy until Mark Carney takes the helm so Thursday’s event could be a non-event. As such, sterling could be a mixed bag. The ECB, RBA, and BoJ are clearly dovish while the BoC and RBNZ are hawkish. The Fed is on watch but positive data continues to build the case for a strong USD. The BoE’s decision sets the tone for sterling the next 30 days. Which way will the Old Lady lean?

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Sterling Digest, April 30 2013: April rallies bring May selloffs

Slow Trek Into Recession movie poster
Could GBP’s best days be behind it?

Today is the last day of the month and sterling has enjoyed April. $GPBPUSD closed last week at 2-month highs with a rally that finally took it above 1.55 to 1.5546. $GBPAUD rallied to new highs above the 1.50 major psychological level not visited since Feburary. $GBPCAD moved to spike highs at 1.5823. Needless to say, its been a breakout month. Despite the bullish price action, sterling is still very much correcting on long-term timeframes. All the aforementioned pairs are at or around the 50% Fibonacci levels on the weekly charts. And tomorrow is May. For the last 2 years, $GBPUSD has seen a tremendous sell-off in May. Being at new highs and technical levels sets sterling up for a fall more dramatic than its rally.

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Sterling Digest, January 27 2013: follow the trend

KAL Cartoon in The Economist
Can the British economy really afford to abandon the EU?

Last week was epic for sterling. The $EURGBP rallied to new highs above the psychologically important 0.8500 level. The $GBPUSD, $GBPNZD, $GBPAUD, and $GBPCAD all fell to fresh 2013 lows early in the week heading to the Bank of England minutes release. However, when the BoE minutes revealed that it was ready to end quantitative easing and unemployment in the UK fell to new lows, sterling rallied off the lows. In fact, thank in large part to the Bank of Japan, the $GBPJPY rallied to its highest levels in over 2 years. Despite policy makers in the BoE calling for an end to QE, the economic realities of the UK may not allow that to happen. And since BoE meeting minutes are backward looking, sterling may not be able to sustain its Friday gains in this new week of trading. With a very light economic calendar from the UK this week, expect sterling to trade very technically and at the whims of the USD with the $FED rate decision looming mid-week.

 

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Sterling Digest, January 20 2013: Safety issues

Goodbye Europe. The Economist cover

Sterling has weakened considerably to kick off 2013 with several themes at play here. One is the fundamental fact that the British economy stands to enter a triple dip recession having ended 2012 with no growth. Secondly, the EU is looking  much more attractive to investors. While 2012 will be remembered as the year investor fled euros and parked their money in sterling and swiss francs, 2013 sees these same investors putting their money back in euros. Lastly, I have noticed that sterling is correlating to the USD much differently than it had in 2012. While a strong GBP saw a strong USD (and visa versa), that correlation is no longer. Now sterling is weak across the board with currencies of the stronger economies (CAD, AUD, NZD) leading the charge.

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Sterling Digest, May 23, 2012: flip-flop

Bank-of-England-Logo
Bank of England logo

Adam Posen’s flip-flop on QE makes the Bank of England more dovish especially as economic data continues to deteriorate at an alarmingly fast rate. While the $GBPUSD and $GBPJPY have been sterling weak, these pairs’ move lower is also tied to increased risk aversion. Conversely, sterling has remained very robust against the commodity dollars. Both the $GBPAUD and $GBPNZD have already made new highs on the week. Will tomorrow’s UK GDP release be the final nail in the GBP coffin?

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Sterling Digest, May 22 2012: mixing business and pleasure

G8 summit
Could be a G8 reaction to markets

G8 summit leaders enjoyed their weekend in a retreat, unconference with very mixed reaction from markets. The open was spent violently going nowhere as cable is still bouncing around 1.58. No momentum or conviction on either side. Sounds like opposing G8 stances, doesn’t it. As the news week gets underway a huge drop in UK inflation that has hit its lowest levels in over a year. Less inflation leaves the door open for more QE at a time where economic data has not been supporting the hawks at the BoE. The market looks ahead to the BoE minutes release tomorrow to see if recent hawks have new dovish feathers.

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Sterling Digest, May 18 2012: Facebook Friday

Mark Zuckerberg rings the Nasdaq bell from California Zef Nikolla/AP
Mark Zuckerberg rings the Nasdaq bell from California (Zef Nikolla/AP)

$FB is so hot that Nasdaq brought the bell to them. However, $FB Friday didn’t change profit-taking week end flows leaving sterling a mixed bag on the week. $GBPNZD has been a monster breaking out to new highs again this week. $GBPAUD and $GBPCAD, meanwhile, chopped around in wide ranges. And the $GBPJPY and $GBPUSD fell hard. A $GBPUSD close BELOW 1.58 is as big a deal as a close below 125.00 is for $GBPJPY. Those cracks we noted all week in this digest seemed to widen a bit more today.

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Sterling Digest, May 16, 2012: cracks deepen

really nice looking coins from 1967, many with full lustre
Weak sterling still looks good

Sterling cracks from Friday that were glossed over on safe haven flows deepened today thanks to Bank of England Governor Mervyn King. Complete with a GDP downgrade for 2012, King’s inflation report weakened sterling across board. However, currency pairs like the $GBPCAD, $EURGBP and $GBPAUD are holding up quite well in the aftermath. General commodities weakness and euro woes continue to benefit GBP verus these currencies. These same conditions also benefited the USD as the $GBPUSD closes below 1.60 for the first time in 4 weeks.

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Sterling Digest, May 10 2012: NO QE4

The Beautiful British Pound Sterling
Beautiful trend in sterling continues on

The euro sank this week as the Eurozone became unhinged in political elections that ousted leaders who led the charge for austerity. $GBPUSD followed in sympathy but today’s BoE decision to hold off on another round of quantitative easing (QE4) has lifted sterling across the board. As with any strong trend, the contrarians are circling. Many bears are out looking to short sterling especially in $EURGBP and $GBPUSD. But this bull trend in sterling is not one to step in front of. Don’t fight the flows!

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