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Tag: GBPAUD

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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, April 23 2013: bears in bulls’ clothing

Bears sitting for a portrait. Painter paints a bull.
Pound Sterling

It’s the last full week of April. Then the bears come in. “Sell in May”, as they like to say. Sterling has been enjoying a nice corrective rally all month. I championed the new bullish sentiment on the blog here and here. But the bull shine could be starting to fade. $GBPUSD has many traders calling a top. Fitch downgraded the UK economy late Friday and $GBPUSD opened the week to drop to 1.5200 while $EURGBP spiked to 0.8590 highs. However, the weakness has been short-lived. Once the Monday trading session commenced, sterling found its legs rallying across the board. $GBPAUD staged a breakout in Monday trading. There are some reasons. Fitch’s downgrade is old news. Poor economic news news lately is not translating to much lower prices. With the economic calendar very light out of the UK this week, sterling could be a mixed bag to finish the month.

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Sterling Digest, April 16 2013: terror attacks

Iron Lady rightfully(?) kicking the King of Capitalism

What happened Monday? What a trading day. Commodities fell off a cliff in a real scary way. $GBPAUD, $GBPNZD, and $GBPCAD rallied over 200 pips in yesterday’s trading session as those commodity dollars took a major hit along with $GLD, $SLV, and $CL_F. It was incredible. Then bombs exploded later Monday morning during market hours in Boston. Another terrorist attack in the United States. The USD rallied slightly on the news as $GBPUSD tumbled below support but in today’s trading session cable looks bullish again. The markets feel a bit more stable today as the sterling continues to firm except versus the euro. $EURGBP has taken out major resistance at 0.8570 as it has rallied to new highs so far today at 0.8582. What is the world coming to?

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Sterling Digest, April 8 2013: freedom to grow

Political cartoon from The Independent. Bust and Bust for sale
This may not work but neither will austerity

As expected last week, sterling has strengthened though mostly on the back of weaker fundamentals elsewhere in the world. The weaker-than-expected US jobs report helped $GBPUSD surge above 1.5250 resistance that had capped rallies since February. The weak Canadian jobs report also sent $GBPCAD to new highs at 1.5650 also not visited since February. The $GBPAUD reached new highs at 1.4825 on the back of a still dovish RBA. The only sterling pair that hasn’t found GBP strength is the $EURGBP as the EUR finds a Cyprus bottom for reasons outlined well in the linkfest below. It’s a light calendar this week with all eyes on Wednesday’s FOMC minutes release.

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Sterling Digest, April 1 2013: the quarter for sterling

A handful of money, UK sterling coins
Start the new quarter with a handful of sterling

Happy new quarter! The 1st quarter of 2013 has seen US and UK equity markets rally into new highs; the euro rally until Cyprus hit; and sterling plunge to new lows all the while. As the new quarter gets underway, it is an interesting time to think about sterling rally. Since Cyrpus has undermined confidence in the European banking system, the $EURGBP has fallen accordingly. Likewise, the $GBPUSD, $GBPAUD, $GBPNZD and $GBPCAD are failing to move lower after hitting new yearly lows. It stands to reason that this next quarter could bring a sizable correction to GBP weakness as sterling enjoys safe haven flows and a central bank on hold until its new governor takes the helm.

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Sterling Digest, March 26 2013: intriguing strength

front page of City AM March 21 2013
Perfect environment for a weaker GBP

Thanks to Cyprus, sterling managed to catch a bid last week on European haven flows. To start this new trading week, however, GBP has traded weak with $GBPUSD, $GBPAUD and $GBPNZD all off their highs of last week. Naturally, sterling still remains stronger versus the euro as the Cypriot crisis still remains. With a relatively light news week from the UK, look for sterling to remain mixed as it gains strength against the euro and possibly the USD but remains weaker against the commodity dollars.

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Sterling Digest, March 17 2013: dangerous precedent

cartoon depicting Cyprus bailout
Very dangerous indeed

Cyprus has put the PIIGS front and center again just when market participants thought that ship had finally sailed. Citizens of the PIIGS, in particular, should rightfully be concerned about the possible seizure of their bank accounts. Furthermore, if you have money parked in any country that was on the brink of a bailout, you are headed to the ATM right now and to the teller window come Monday. So what does this have to do with sterling? Just when it looked like the weak GBP trend would resume in this new trading week, expect sterling to strengthen on the back of safe haven flows behind the USD, CHF, and JPY. While this is certainly the case for the Monday open, will this new safe haven status really last? With all the news from the UK this week — CPI, BoE minutes, unemployment report, and retail sales — one can have her doubts. Not to mention the RBA and FOMC minutes releases too. Remember it is market reaction to the news, not the news itself, that dictates price action. This week will be no different.

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Sterling Digest, March 11 2013: the charts that worry

Various denominations of GBP in regular visible light
Price doesn’t look this pretty

Sterling did produce a correction rally last week as $GBPUSD made a high at 1.5200, $GBPAUD as high as 1.4850; $GBPNZD as high as 1.8350; $GBPCAD as high as 1.5650; and $EURGBP as low as 0.8590. These rallies, for the most part, kept GBP below previous long term lows. This technical development was certainly the case for the $GBPUSD, $EURGBP, and $GBPNZD where all pairs have broken long term support levels. While the BoE did not move on additional QE, the surprising development of the week was the BoE’s possible change to a dual mandate to combat both inflation and unemployment. With this new trading week very light out of the UK, expect sterling price to continue to weaken across the board. While US news and the RBNZ rate decision will influence those respective currency pairs, the protocol with sterling is clearly to sell the rallies.

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Sterling Digest, February 25 2013: hardly at extreme levels

KAL Cartoon in The Economist
Put GBP on the roof and you illustrate current sterling sentiment in the market

Sterling weakness accelerated last week and culminated in the UK loosing its AAA credit rating on Friday. Now that monetary policy is dovish, economic activity nil, and credit rating downgraded, sterling has entered this new week of trading with a trifecta of negativity. And yet traders are hardly short GBP yet. In fact, I don’t think we will have reached extreme levels of short GBP trades until, $GBPUSD trades at 1.4750, $EURGBP at 0.8900, $GBPAUD trades below 1.4500, $GBPCAD below 1.5400, and $GBPNZD below 1.8000. Until price gets to those levels, expect corrections to be short-lived as the weak sterling trade gains momentum.

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