GBPUSD, Daily               

The pound has come under pressure in London trading today. EURGBP buying has been a driver, with the cross rallying some 0.5% to a peak of 0.8510, since ebbing to around 0.8490. Gains failed to sustain above the 20-day moving average, which is at 0.8503. Cable, meanwhile, has clocked a three-session low below 1.2600, following the UK production data (see below) making today the first day the pair has fallen below its previous-session’s low since November 28. Recent give-away remarks and leaks have suggested that the government is intending a “soft” Brexit have, along with the BoE’s shift last month to a neutral from a dovish stance and a loosening of fiscal policy, been underpinning recent sterling outperformance. There are still a lot of unknowns regarding how Brexit will unfold and how it will impact medium-to long-term economic performance. The pressure on sterling remained

UK production data unexpectedly contracted in October data. Industrial output fell 1.3% m/m, the biggest fall in four years, accelerating from September’s 0.4% contraction. The median forecast had been for a 0.2% m/m gain. In y/y terms, industrial production fell 1.1% after a 0.4% gain in the previous month, the biggest decline since August 2013 and wrong-footing the market expectation for a 0.4% gain. The ONS stats office reported that ongoing maintenance in the oil and gas extraction industry affected industrial output. The narrower manufacturing production gauge, however, which excludes the oil industry, fell 0.9% m/m and by 0.4% y/y following respective prior-month gains of 0.6% and 0.1%, thwarting market expectations for 0.2% m/m and 0.8% y/y advances. Sterling traded 0.2% lower versus the dollar in the wake of the data release.

The psychological 1.2600 is key as the pair remains positive on the Daily time frame with short term resistance at 1.2720 and support at 1.2580 and 1.2500.

Janne Muta

Chief Market Analyst

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GBPUSD, Daily              

The pound has settled following its recent two-week period of underperformance. The Fed’s less hawkish than anticipated guidance has given Cable a prop. Cable logged a five-week low at 1.2945 ahead of the Fed’s announcement yesterday before vaulting over 1.3050, but sterling is still down by an average 1.8% versus the G3 currencies on a week-on-week comparison. The pound is also down by an average 19.9% versus the G3 currencies on a year-on-year basis.

Cable resistance is at 1.3154-55 and 1.3189-90, levels which encompass a triple head of three-week trend resistance and the 20- and 50-day moving averages and the Parabolic SAR remains negative. Declining business investment in the face of protracted Brexit uncertainties suggests that sterling will remain biased lower into quarter four and 2017. However, in the shorter term daily candle the Tweezer Bottom on Tuesday (September 20) suggest some further strength against the longer term down trend. Should the 1.3070 level be breached and broken on the Daily candle then Target 1 at 1.3150 is a possibility along with a run back to Target 2 at 1.3300 once resistance at 1.3190-1.3200 area is overcome.

Chief Market Analyst

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GBPUSD, Daily              

U.S. housing starts underperformed with a 5.8% August drop after small upward revisions, with a 0.4% permits decline that left a weak report overall, though both measures appear poised for quarterly gains in Q3 with persistent growth in starts under construction. Starts weakness was concentrated in the south, though it was spread across the single and multi-family components. Starts and permits continue to ratchet higher from weak Q4 levels.

The dollar dipped following the housing starts data, which were much worse than expected. EURUSD ticked up 10 points to 1.1186, as USDJPY fell to 101.78 from over 101.85. However, the pound is the day’s loser, showing 0.5% declines versus the dollar and euro and a 0.6% fall versus the yen and trading at or near one-month lows against all of the G3 currencies. It’s all about Brexit, which, after a summer lull of political activity and a run of data showing a better than expected economic rebound from the initial post-vote wobble, is back at the centre of investors’ big-picture concerns. Earlier in the month, for instance, Japan’s foreign minister published a 15-page document warning that Japanese companies in the UK, which have created 440k jobs, would consider moving to the EU if Britain did not retain full access to the single market, avoids customs controls on exports, and continues “passporting” rights that allows UK-based non-EU businesses to trade across the EU. A report from the UK’s Financial Conduct Authority today, meanwhile, showed that 5,500 UK-registered firms rely on “passports” to do business in the EU. So far the only guidance from the UK government, which is grappling with the magnitude of task ahead, is that “Brexit means Brexit,” which has done little answer the core question of whether the Britain is heading for a hard exit or a soft exit, the latter being a scenario where full access to the single market remains, but at the likely cost of not taking back full border controls.

Chief Market Analyst

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GBPUSD, Daily              

Last week’s good data from the UK continued this morning; UK August services PMI came in much stronger than expected at 52.9.  in the headline business activity index, up over five points from July’s post-Brexit vote nadir of 47.4. This is the largest month-on-month gain in the 20-year history of the data series, and follows the record 4.9 point drop between June and July. At 52.9, the heading reading is the best since May, but remains below the long-run average. The volatility and uncertainty caused by the Brexit vote clearly reflected in these wild monthly swings. New work rose at the fastest pace in four months, with companies reporting that the weak pound has helped win new business, including from tourism, along with returning confidence following the initial disruption caused by the vote to leave the EU. Job creation also resumed, while input price inflation rose to a 33-month high on the back of the weaker pound. With the construction and manufacturing PMI surveys having shown a similar rebound from July weakness, the composite PMI worked out at 53.6 in August, up from 47.6 in July. The data suggest the UK economy will avoid recession in Q3. The blot on the horizon is the exit negotiation process the UK has to undergo with the EU.

Cable continues to rally on the news. It failed to hold the 1.3300 level on Fridays close, but this morning GBPUSD is now trading well north of this key psychological level at 1.3350.  Should it hold above 1.3330 then the Daily chart shows short term resistance at 1.3400 and support at 1.3115.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, Daily              

The good news keeps coming from the UK this week. UK construction PMI recovered much better than expected in August, lifting to a headline reading of 49.2 after July’s post-Brexit vote reading of 45.9. The median forecast had been for 46.5. This follows the stellar rebound in the manufacturing PMI in August, and the hope is that the PMI for the dominant service sector, which will be released on Monday, will follow suit. Offsetting the good news to an extent, was guidance from retirement home builder McCarthy & Stone, who said it had seen “evidence of some weakness.”

Cable initially rallied on the news, before hitting resistance at 133.00, NFP data is awaited as a potential catalyst for the break of the 1.3300 -1.3100 range.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, H4            

UK flash July PMI plunged to 47.7 in the composite reading from 52.2 in June and below the median forecast for a decline to 48.5. The headline and nearly all of the component parts fell at the lowest levels since the height of the financial crisis in early 2009, giving a clear indication of the impact that the Brexit vote has had. Markit, the compiler of the survey, described the data showing a “dramatic deterioration in the economy,” estimating that the data is signalling a 0.4% contraction in Q3 GDP, assuming that August and September continue the slowing seen this month. A sharp drop in new orders, to 45.5 from 52.3, and a dive in the expectations component of the services PMI, both good leading indicators of the economy, suggest that the pain will continue. Sterling dove over a big figure to a 1.3165 low versus the dollar in the wake of the data release. The flash indicator is based on 80% of responses to the full survey. Final data will be released at the beginning of August.

The 4h chart has support at the 20 MA at 1.3182 and 1.3110 and resistance at 1.3275.

Meanwhile across the English Channel, French and German PMIs better than expected. French manufacturing as well as services PMIs unexpectedly improved in July, and while the German manufacturing reading eased, it fell back less than feared and remains firmly above the 50 point no change mark, while the services reading actually jumped higher. So a confirmation of what French national business sentiment numbers already indicated yesterday, namely that the impact of the Brexit vote on real sector sentiment has been limited so far, even as uncertainty increases. The financial sector by contrast has been hit severely, which confirms the issues Draghi raised yesterday – the apparent divergence between financial market and real sector confidence.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, H4            

The close of the latest 4 hour candle was sufficient for us to take a SHORT position in this pair following a run up. The UK Retail Sales data (see below) simply added some fundamental momentum.  The 4hour candles had been forming a steady six consecutive march upwards from the Hammer candles of July 19.  The peak bull candle at yesterday’s (July 20) close and with a long wick followed by the following bearish candle with a wick to the south suggested at least a pause in the uptrend or a further retrace.  The 08:00 candle this morning suggested further downside with target 1 at 1.7546 and possible target 2 at 1.7465 where we started a few days ago.

UK June retail sales undershoot expectations due to wet weather, which stirred apathy for summer fashion purchases. The headline sales figure contracted by 0.9% m/m, reversing the 0.9% m/m gain of May. The median forecast had been for a 0.5% decline. The y/y comparison was 4.3%, short of the 5.0% median forecast and down from the 5.7% y/y gain seen in May. It’s not clear if the June 23 referendum, either the run-up or in the initial wake of, had much impact. Anecdotal signs suggest that retail sales dipped in the week after the Brexit vote, but have since rebounded.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, H4             

The UK headline unemployment rate fell unexpectedly to 4.9% from 5.0% and employment and inactivity rates registered record highs.

UK unemployment fell by 54,000 to 1.65 million between March and May.  Average weekly earnings including bonuses increased from 2% to  2.3%, in line with expectations.  The employment rate – the proportion of people aged 16 to 64 in work – was 74.4%, the highest since comparable records began in 1971 and the Office of national Statistics also reported that the inactivity rate rates those 16-64-year-olds not working and not seeking work – was 21.6%, the lowest since 1971. The new finance minister Philip Hammond “Today’s employment and wage figures are proof that the fundamentals of the British economy are strong”.

All this is a pre-Brexit snapshot. The median forecast had been for an unchanged 5.0% outcome. The more timely claimant count figures, for June, painted a slightly different picture, with jobless claimants rising fractionally, with May data revised to 12.2k from -0.4k reported originally. All this is what we’re seeing in the rear view mirror; a view that’s changing for the worst in the wake of the Brexit vote.

A survey of 1,000 heads of businesses by the Institute of Directors, conducted in the two days after the vote to leave the EU, found that 24% were planning to freeze recruitment, 5% were planning on making reductions, and 22% were considering moving some of their operations abroad (versus only 1% who said they were bringing their operations back).

Sterling spiked up on the release of the headlines with cable touching 1.3175, GBPJPY up to 140.30 and EURGBP down to 0.8350.  Our Quarterly position on Cable remains and we are still in our SHORT GBPUSD trade from July 14^th.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

GBPUSD, Daily             

The next UK Prime Minister appears to Theresa May as her only opponent to be the next leader of the ruling conservative party, Andrea Leadsom, withdraws from the contest.  Mrs Leadsom was the last of the Leave campaigners to be in the running for the top job in UK politics, the UK votes for a Brexit and none of its leaders are left standing.

Sterling immediately responded positively on the news as cable spiked over 1.3000 before falling back and EURGBP tested the 0.8500 level. At the same time the UK100 rallied this morning to 6650 and officially entered a “bull market” having rose 20% since its most recent low of 5565 at the beginning of February.  The strong rally in the UK100 has a strong correlation to the fall in the value of sterling since the Brexit vote. Many of the companies within the UK100 earn most of their revenue in US Dollars, but report in UK pounds thus helping their immediate short term outlook.

Cable could recover from these 1.300 levels as the political situation in the UK continues to clarify itself. However, with the BoE MPC meeting this week and expected to announce a rate cut AND more quantitative easing, the stock market and bond market rallies are likely to be the main beneficiaries.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.