On a technical level Sterling/US Dollar seems to be heading back below 1.6000 which could pave the way to a possible bearish move towards 1.5800.
Foreign Currency Market Update – GBP / USD Update
The Pound to US Dollar exchange rate fell this morning as the ongoing sovereign debt crisis in Europe weakened UK Trade Balance figures. Sterling’s latest slip-up has caused the currency pair to dip below an important support level at 1.6080 and has opened the door for stronger retracements.
Sterling’s downward trend from April’s 8-month highs continued last week as Consumer Credit in the US improved and House Prices in the UK declined. The Pound was down almost a cent against the Buck before the Bank of England’s announcement that the Monetary Policy Committee had decided to leave quantitative easing on hold. The BoE’s looser stance gave way to a strong Sterling rally and GBP/USD regained half a cent. However the relief was short-lived and a decline in global risk sentiment over the weekend allowed the Dollar to capitalise on its position as the number one worldwide safe haven currency.
On a technical level Sterling/US Dollar seems to be heading back below 1.6000 which could pave the way to a possible bearish move towards 1.5800. However if investors decide to react harshly to April’s weak US Advanced Retail Sales or the slowdown in last month’s US CPI inflation figures, then the Pound has a possibility to mute its losses. The BoE’s quarterly inflation report will be another event that wields market volatility as the MPC detail their economic projections and inflationary concerns. If conviction is strong that further QE is unnecessary then the Pound will benefit from the release. But if policy members are anxious about the Pound’s current strength against the Euro and the negative affect it is having on British exports, then a further bout of QE in the near future could be on the cards. Under this circumstance Sterling would be odds on to suffer further depreciation against the US Dollar.
Summary of major upcoming data releases that we think may move the market.
- Sterling had a dip on yesterday’s weak Trade Balance figures…
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound weakened against the majors yesterday morning
- Pound Sterling, the Euro and US Dollar exchange rate news flash – The Pound weakened back towards 1.5950 against the U.S Dollar this morning
- Foreign Currency Exchange Rate Forecast – The Pound fell against the US Dollar
- Foreign Exchange Rate Forecast – The Pound initially fell against the Euro exchange rate