GBPUSD, Weekly            

UK trade deficit widened to GBP 2.3 bln in May data, out from the GBP 1.3 bln deficit since in May last year. The goods deficit widened by GBP 500 mln to GBP 9.9 bln, with exports falling by GBP 2.1 bln while imports declining by GBP 1.6 bln. That was the biggest goods deficit for the month of May on record, according to the ONS stats office. The services surplus rose to GBP 7.6 bln.

The impact of the recent sharp decline in the pound will be mixed to negative, benefitting exporters but also pushing up costs of imported components for many. The UK imports far more goods than it exports. Goods such as cars will become more expensive to the UK consumer, with 85% of demand is met by imported cars while domestic manufacturers rely heavily on imported parts. The trade deficit has acted a drag on UK economic growth, which fell to 0.4% in the first three months of this year, but a far more significant impact comes from the poor performance of the UK’s foreign investments.

The pound is trading softer in London trade, with Cable having ebbed to the low 1.2900s and EURGBP having lifted above 0.8570. Signs of weakening UK business and consumer sentiment, and an ebb in economic activity are keeping a lid on the pound. A survey of UK consumer confidence by Gfk, conducted after the Brexit vote (between June-30 to July-5), dove to -9 from -1, which is the sharpest drop in the data series since 1994. Think tank NIESR said yesterday that it estimates UK GDP went negative in June after stagnating in May. Footfall on high street shops is down and car sales and property market transactions are also down. There are bright spots, with exporters such as Burberry, a high-end fashion retailer, likely to benefit from the weaker pound, while a trade deal with India may happen within a year (a deal between the EU and India has been held for years by the former’s concerns about wine and car trade). But it’s unlikely the good-news stories will offset the probability that the UK ends up with a net-worse trade deal with the EU, given the terms the UK wants. The reason the pound is trading nearly 12-14% lower is because markets are discounting a shock to the UK economy’s terms of trade.

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         

U.K. Referendum Day: The day of the U.K.’s referendum on EU membership if finally here, although polling stations don’t close until 21:00GMT and results won’t be in until early Friday. FT and Economist opinion poll trackers give the “remain” camp a slight lead, but also suggest a tight outcome, that could still go either way. If the U.K. really votes for an exit from the EU it would likely cause considerable turbulences tomorrow, as markets now seem to be going with bookmakers, who are giving good odds for “Bremain”.

Central bank officials have stressed that they stand ready and are prepared to step in and provide additional liquidity to cope with the short term fallout, but the longer term impact will be much more difficult to predict and deal with. The short term impact aside, biggest risk is that the U.K. vote would just be the start of a general unravelling of the EU, as protest parties elsewhere jump on the band wagon.

The bookmakers are clearly tilting towards Remain causing GBPUSD to rally as high as 1.4830 overnight and closed yesterday over the key pivot point of 1.4700 and above the 200 DMA.  However, the bookmakers are only reflecting the volume of money placed and as Mathew Shaddick  Labrokes Head of Politics noted yesterday :

“On the eve of referendum day we face a very similar scenario to last year’s general election. Back then, the polling averages showed a tie between Labour and the Tories, whilst the betting markets gave the Conservatives an 80 per cent chance of being the largest party.

This time, the polling averages have it as a dead heat, yet the bookies are rating the chances of a Remain vote at 76 per cent. Of course, it’s a bit of an unfair comparison; pollsters aren’t paid to predict anything, just to provide a snapshot of public opinion at a given time. That’s proving tricky enough, as shown by the very different results being generated by phone and online polls.

So, should we be following the money again? Maybe not: the huge rally on the financial markets and the big swing to Remain on the betting this week seem curious. Many people assumed it was anticipating some very good polling news for the Remain camp, but that didn’t really happen – the recent surveys have just confirmed that this is very, very close. It’s widely expected that the status quo side will improve somewhat on polling day (because that’s what tends to happen in these sorts of referenda), but that factor should already have been priced in.

One interesting pattern in the betting for this vote has been that whilst 75 per cent of the money staked has been for Remain, the majority of actual bets have been for Leave. That’s because the average bet stake for Remain is around £450, for Leave it’s just £70.”

Sterling remains strong this morning with GBPUSD trading at 1.4780 and EURGBP at 0.7670.

As always, do what is probable and trade with strict risk management, this is a once in a generation fundamental news event for the GBP with repercussions for many asset classes.

GBPUSD, H4        

The tragic events on the streets of small town in northern England yesterday prompted a dramatic about turn in the UK political tone, which was mirrored in the markets. The EU Referendum campaign has been suspended, with no indication of when it will be restarted;   however the referendum will still go ahead next Thursday. The FT’s poll tracker is showing 48% support to leave the EU and 43% support to remain in the EU, with the Leave campaign having gained one percentage point and the Remain camp having lost one percentage point following the inclusion of the two latest polls. While the last six polls have all shown higher support for leaving the EU than remaining a part of the single market, bookmakers are still showing the betting market that the UK will vote to remain in the EU. Ladbrokes, for instance, is showing a 64% implied probability in favour of Remain. This backdrop and news of the suspension of campaigning prompted an unwinding in sterling short positions yesterday. The pound is sitting 2% above the two-month low seen yesterday against the dollar at 1.4012 and currently trades at 1.4290. There was also major volatility yesterday, on the Gold market as a dramatic reversal from recent highs at $1315 took hold. The key commodity declined almost 3% to trade as low as $1276 before recovering to the $1280 -1285 level.

Sentiment is the major driver of the markets at the moment with technicals and fundamentals taking a back seat. These wild intra-day swings and volatility will persist until the resolution of the UK Referendum. This is likely to be “around breakfast time” (anywhere between 03:00-05:00 GMT) next Friday June 24, however , there is considerable uncertainty about when the actual national declaration will take place as it is dependent on all 382 local totals being declared.

Although there is no official exit poll, referendum rules do allow exit polls on the day of the referendum so long as they are not published until after polls close (19:00hrs GMT). The UK hedge fund industry has commissioned private exit polls to get an early warning of the result and this will inevitably move sterling as they take their positions based on the result of their polling.  However, doing an exit poll in a referendum is very difficult as there is not a lot of past data on which to base your findings. There have not been many referenda in the UK and therefore it is difficult to get the methodology correct.  The major UK media outlets will not be publishing exit polls due to these problems. So, as always, trade with strict risk management and expect increased volatility to be the only constant in the week ahead.

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, H4       

UK unemployment unexpectedly fell to 5.0% in April, which is the lowest level seen since November 2005. The median forecast had been for an unchanged reading of 5.1%. The employment rate was 74.2%, which is the joint highest since records began in 1971. Wage data were also perkier than expected, with the including-bonus average household income figure rising to 2.0% y/y in the three months to April, unchanged from March and contrary to expectations for a dip to 1.7%, while the ex-bonus figure rose to 2.3% y/y from 2.2%, contrary to the median forecast for a dip to 2.1%. The more timely claimant count change dipped by 0.4k in May, while the claimant count rate was 2.2%, unchanged from an upwardly revised figure for April. The data catalysed a 30 pip rally in sterling, thought follow-through has been limited given Brexit preoccupations.

With nine days to go until the UK’s referendum the FT poll tracker is showing 47% support for leaving the EU and 44% for remaining, with the Vote Remain campaign losing one percentage point since the last update. Conversely, bookmaker Ladbrokes is showing the betting market is discounting a 62% probability for the UK remaining in the single market, which is up from 57% yesterday, likely reflecting a betting response to the threat by pro-EU chancellor Osbourne today of higher taxes and cuts in public services in the event of a Brexit vote. Given the disrepute of pollsters following their abject failure to predict the comfortable Conservative Party victory at last year’s general election, many are looking to the betting market for a more accurate gauge on the vote outcome.

The H4 time frame has near term resistance at 1.4210-1.4220 and support at 1.4100, with the FOMC announcement and press conference awaited later today too.

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        

UK May CPI remained unchanged at 0.3% y/y, below the median for 0.4% y/y. Rising transport costs and restaurant bills were principal upward drivers. Core CPI also came in unchanged, at 1.2% y/y. The data fits BoE projections, which is also expecting prices to rise markedly in the second half of the year on the back of rising energy prices, though the central bank still thinks CPI will remain below 2% at its two-year forecasting horizon. The wildcard will be if the UK votes to leave the EU, which would more than likely trigger a sharp drop in sterling (most think to around 1.20 versus the dollar) and which would in turn drive inflation well above BoE forecasts. As was the case in the 2008-2014 period, when CPI remain above the 2% target, the BoE would like ignore a post-Brexit spike in inflation.

The UK PPI data that was released at the same time was a little stronger than expected, however, sterling continues to trade lower.  1.4050 marks the April low and 1.3850 the 2016 low with Brexit woes continuing to dominate sentiment.

Janne Muta

Chief Market Analyst

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

http://www.topforexbrokerscomparison.com

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        

Sterling has seen a bout of Brexit-related volatility today (and this week), dipping sharply against the dollar, euro and other currencies, before whipping back some. One-month implied volatility for Cable spiked to a new six-year high of 23.7%, up 2 points on the day, as Cable clocked a six-day low at 1.4410. The pair has since recouped above 1.4440. EURGBP spiked from sub-0.7810 levels to over 0.7850, since settling around 0.7830. In a word, choppy, and very much reflective of the fast nearing referendum, which takes place the Thursday after next. Televised debates between Remain and Leave campaigners reached fever pitch this week, stirring a sense of unease among onlookers. The FT’s poll tracker continues to show a narrow 2 percentage point lead for the Remain camp, with 45% support versus 43% support for Leave. Despite the narrowness of this, Bookmaker Ladbrokes is showing that the betting market is giving a 74% probability for the UK remaining in the EU, up from the 69% nadir seen earlier in the week after a spate of polls suggested a shift in support in favour of Leave. Our hunch is that the 12% of undecided voters — who presumably lack the headstrong conviction for leaving the EU like true Brexiters — will be more likely to fall on the Remain side of the fence, if only out of fear of near- to-medium term economic consequences of Brexit.

Construction output data and the BOE Consumer Inflation expectations both beat their consensus figures. Consumers now expect the price of goods and services over the next 12 months to rise by 2.0% compared to 1.8% in the last quarter.

GBPUSD is currently 1.4431 having traded as low as 1.4409.  DAILY near term support at 1.4415 and resistance at 1.4545. 1.4700 remains the longer term resistance level as the pair bounces between the 20 DMA and 50 DMA.

Janne Muta

Chief Market Analyst

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

http://www.topforexbrokerscomparison.com

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        

UK production unexpectedly jumped 2.0% m/m in April and by 1.6% y/y, up from the 0.3% and -0.2% respective outcomes that were seen in March. The median forecasts had been for 0.0% m/m and -0.4% y/y. That was the biggest m/m rise since July 2012. The narrower manufacturing output gauge surged by 2.3% y/y. The unexpectedly strong report defies conjecture that Brexit risk has been taking a toll on economic activity, although PMI survey data is pointing to GDP growth slowing to 0.2% y/y in Q2, which would be half the Q1 figure.

Sterling has been knocked back after rallying following the release to the report. Cable spurted nearly 50 pips higher to a peak of 1.4580 before about-turning to the 1.4540-45 area. The gains offered an opportunity for the Brexit wary to sell. With only two weeks and a day to go to the EU vote, the FT’s poll tracker is showing the Remain campaign only marginally in the lead, with 45% support versus the 43% for Leave. We are of the view that the 12% of undecided voters will come down on the Remain side on the day of the poll. Undecided voters won’t have the headstrong conviction for leaving the EU as the true Brexiters do, and fear of near- to-medium term consequences will, we think, tip them to the vote Remain option. Registration for the poll closed yesterday with many potential voters not registered. According to the UK government’s data website, 525,000 people applied to register to vote during Tuesday – 170,000 were aged 25 to 34, 132,000 under the age of 25 and 100,000 aged 35 to 44.

Janne Muta

Chief Market Analyst

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

http://www.topforexbrokerscomparison.com

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 Markit construction PMI unexpectedly fell to 51.2, a near three-year low and contrary to the median forecast for an unchanged 52.0 reading. The survey also revealed the first drop in new orders since April 2013, although job hiring hit a four-month high. Markit reported that businesses noted a general slowdown in market conditions and delays to client decision making ahead of the EU referendum, though 51% of respondents expect a rise in output over the next 12 months and only 14% expecting a fall. Yesterday’s manufacturing PMI surpassed expectations in rising to 50.1 in May from April’s cycle low of 49.2, but the survey nevertheless highlighted that higher uncertainty stemming from weaker economic growth and the Brexit issue is taking a toll on investment spending. The services survey will be release tomorrow.

GBPUSD has recovered from yesterday’s sub 1.4400 level a little this morning to trade at 1.4435. Brexit continues to loom with three weeks to polling day the FT poll of poll has 46% Stay, 43% Leave and the Undecided at a substantial 12%.

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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, H1     

UK Q1 GDP was revised lower:  The UK’s GDP during the first quarter of 2016 was revised lower to 2.0% y/y from 2.1% in the preliminary estimate, disappointing the median forecast for an unchanged 2.1% reading. The q/q figure remained at 0.4%, as originally estimated, matching the median forecast. Services rose by 0.6% q/q while industrial production declined by 0.4% and construction by 1.0% q/q . In other data out of the UK, BBA mortgage approvals fell to 40.1k in April, down from 45.1k and well off the median forecast for a more modest decline to 44.7k. The outcome is also the lowest since March last year. The sharp rise in transaction taxes for investment properties, which was implemented in April, along with the Brexit issue (Remainers have been arguing that leaving the EU will hit house prices), are getting the blame. Sterling took a tumble in the wake of the data releases, putting Cable at an intraday low of 1.4677 after earlier logging a three-week high at 1.4739.  A close above 1.4700 on the daily time frame would be very interesting for the BULLS.

Janne Muta

Chief Market Analyst

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

http://www.topforexbrokerscomparison.com

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, H1      

UK labour data showed an unexpected rise in pay, Average household income (excluding bonuses) lifting to a +2.0% y/y rate in the three months to March, up from 1.8% at the last measure. The bonus-included figure remained unchanged at +2.1% y/y. Unemployment for March remained unchanged at the cycle low of 5.1%, while the April claimant count dipped by 2.4k and the claimant rate remained unchanged at 2.1%. The pound very briefly rallied on the data in a knee-jerk reaction to the BoE-watched pay headline, but quickly turned lower.  GBPUSD currently trading at day lows of 1.4410, with the One Hour chart  having broken below some key moving averages and outside the lower Bollinger band.

The Brexit issue continues to dominate the horizon for sterling markets. The latest FT poll of polls has the Remain group on 46% the Leave campaign on 44% and the undecided down to 10%. A little over five weeks to referendum day and the polls continue to be erratic, no wonder GBP keeps finding sellers.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Janne Muta

Chief Market Analyst

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

http://www.topforexbrokerscomparison.com

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.