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News

GBP/USD: Bulls taking back the baton, but bearish bias persists to 1.21 handle
GBP/USD has been quite active towards the end of the week, with a steep decline yesterday to a 27-month low, while, today, a solid rebound of almost 1 | 18/07/2019 18:31
- GBP/USD has rallied from 27-month lows on solid data and positive Brexit noise.
- Still room to the upside despite a bearish bias to below 1.22 handle.
GBP/USD has been quite active towards the end of the week, with a steep decline yesterday to a 27-month low, while, today, a solid rebound of almost 100 pips. UK data was ignored at the start of the week, with Tuesday's earnings above forecast and unemployment coming in solid.
However, the talks of the removal of the Irish backstop from any deal resulted in a drop to a fresh 2019 low vs the buck, the lowest since April 2017 - The candidates to replace PM May are indeed more aggressive with their tactics and the likely election of Boris Johnson as the next Conservative leader will add pressure to GBP - both potential leaders, Hunt and Johnson, have said that PM 'May's deal is dead'.
However, the bearish tone around the Dollar has started to factor in on the upside since Trump made warnings over more tariffs on Chinese imports and given the possibility that the Dollar could be used as an additional weapon has brought to light the prospects of a currency war which would be mean a soft dollar policy and less demand for it. Steven Mnuchin, Secretary of the Treasury, made a crafty statement on the matter saying that there will not be any change in Dollar policy, 'as of now'.
UK data continues to impress
Today, GBP/USD ben able to recover, with recent data now being factored in as more positive Brexit headlines start to trickle through again. Solid data in retail sales contributed to the surge, just 3 pips shy of a full 100 pip rally.
"June’s 0.9% bounce in UK retail sales (excluding fuel) suggests that the better real wage growth backdrop may be translating into stronger demand among shoppers," analysts at ING Bank explained, adding,however," it’s worth noting that June’s rise follows two consecutive month-on-month declines during April and May. The underlying drivers of June’s increase were also fairly mixed – second-hand stores reportedly were one of the best performers, while department stores saw the sixth consecutive month-on-month decline in sales."
Brexit uncertainty to weigh
The pound also got a lift after Ireland's PM said that the border issue could be resolved. Also, the EU's Barnier was following up with a will to find alternatives to the Irish backstop. However, the risks to our GBP forecasts remain on the downside, stemming from both risks of a hard Brexit or early elections. The likely confirmation of Boris Johnson as the next Conservative leader and thus prime minister next Tuesday won’t be supportive ahead of the Conservative party conference in late September. There are even now prospects of yet a further extension beyond the31 October Article 50 extension deadline with the appointment of the new President of the European Commission, Ursula von der Leyen, who said in her subsequent speech that she 'stands ready for a further extension to the withdrawal date should more time be required for a good reason."
Easing Cycle? Not at the BoE
As far as the BoE, we are indeed encroaching on a new easing cycle across the spectrum of global central banks and world economies. However, analysts at ING Bank argued that it is too soon to be thinking of rate cuts in the UK: "We think the fact that wage growth has been accelerating means it is too early to be discussing rate cuts in the UK (markets are now pricing a 50% chance of easing this year). But equally, with Brexit uncertainty set to weigh on both consumer and business activity over coming months, we think monetary tightening is also pretty unlikely during 2019."
GBP/USD levels
GBP/USD’s new low was not been confirmed by the daily RSI and divergence assisted in speculative longs stepping in. However, the market now stays offered below the 1.2594 downtrends, according to analysts at Commerzbank who site below 1.2359, "we have very little support until the 1.2108, the 78.6% retracement of the entire move up from the 2016 low."
In the immediate term, however, 1.2457 comes in as the 38.2% Fibo of the 12th July to recent lows retracement while a continuation to the upside, stop territory comes in between 1.2500 and 12530 - So there is prospects of a short squeeze still to come until attention can be reverted back to the downside bias.
Popular News
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USD/CHF stabilising here – Commerzbank
According to Axel Rudolph, analyst at Commerzbank, USD/CHF stabilised marginally above the 61.8% Fibonacci retracement at .9800/.9799. Key Quotes “Onl | 16/12/2019 07:26
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When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?
Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European currenc | 16/12/2019 07:21
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Colombia Industrial output (YoY) rose from previous 0.3% to 2.1% in October
Colombia Industrial output (YoY) rose from previous 0.3% to 2.1% in October | 16/12/2019 07:20
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India WPI Inflation came in at 0.58% below forecasts (0.74%) in November
India WPI Inflation came in at 0.58% below forecasts (0.74%) in November | 16/12/2019 07:08
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Germany: Manufacturing PMI likely to bounce higher in December – TDS
Analysts at TD Securities think that Germany's manufacturing PMI can bounce a bit higher again in December, though with a smaller improvement than the | 16/12/2019 07:05
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Turkey 3mth quarterly jobless average fell from previous 14% to 13.8% in September
Turkey 3mth quarterly jobless average fell from previous 14% to 13.8% in September | 16/12/2019 07:02
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EUR/USD: Consolidation here – Commerzbank
Axel Rudolph, analyst at Commerzbank, notes that EUR/USD is trading back below the 200 day moving average at 1.1153, having last week briefly shot up | 16/12/2019 07:02
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Norway Trade Balance increased to 18.8B in November from previous 5.9B
Norway Trade Balance increased to 18.8B in November from previous 5.9B | 16/12/2019 07:00
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AUD/USD sidelined below 0.6900 handle
The AUD/USD pair was seen oscillating in a narrow trading band through the Asian session on Monday and consolidated the previous session's sharp intra | 16/12/2019 06:54
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ECB’s Holzmann: Possibility of rate change if 2020 trough passes
Reuters reports the latest comments from the European Central Bank (ECB) governing Council member Robert Holzmann, as he says that there is a possibil | 16/12/2019 06:52
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USD/INR extends the bounce to test 71.00 on dovish RBI’s Das
Speaking at an event in Mumbai on Monday, the Reserve Bank of India (RBI), Indian central bank, Governor and MPC Chair Shaktikanta Das said that there | 16/12/2019 06:50
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FX option expiries for Dec 16 NY cut
FX option expiries for Dec 16 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.1030 2.3bn 1.1035 536m 1.1058 651m | 16/12/2019 06:28
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US-China trade and global PMIs amongst market movers today – Danske Bank
According to Danske Bank analysts, markets will continue to watch US-China trade talks closely and any signals on the phase-one deal. Key Quotes “Othe | 16/12/2019 06:25
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USD/JPY clings to modest gains, just below mid-109.00s
The USD/JPY pair edged higher on the first day of a new trading week, albeit lacked any strong follow-through and remained well within the previous se | 16/12/2019 06:15
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China: ‘Phase one’ deal reduces tariff drag in 2020 – Standard Chartered
Analysts at Standard Chartered note that on 13 December, the US and China announced a phase one trade deal and cancelled the proposed tariff hikes on | 16/12/2019 06:11
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Forex Today: Caution over deal details offset better China data; Brexit optimism, PMIs to dominate
US-China trade deal: Despite both sides agreeing on the Phase One trade deal on Friday, markets traded with caution, as they remained sceptical over t | 16/12/2019 06:08
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What's next in store after phase one of US-China trade deal – Danske Bank
Danske Bank analysts note that the US and China both announced on Friday that a phase-one deal had been reached, which marked a shift from escalation | 16/12/2019 05:39
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Australia: Fiscal outlook downgraded – Westpac
Westpac analysts point out that Australia’s budget surplus was cut by $21.5bn over four years as softer economic outlook hits revenues. Key Quotes “Th | 16/12/2019 05:15
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USD positioning to continue to react to incoming trade deal details – ANZ
According to CFTC positioning data for the week ending 10 December 2019, leveraged funds and asset managers changed stances on the dollar as the forme | 16/12/2019 05:10
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GBP/USD: Recovery falters just shy of 1.3400 ahead of UK PMIs
The pound remains supported by the UK PM Johnson’s commitment to sailing the UK out of the European Union (EU) swiftly before January 31st, 2020 after | 16/12/2019 04:49
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China: Industrial sector stabilising – NAB
Gerard Burg, senior economist at National Australia Bank, points out that the “Phase One” trade deal between the US and China has now been concluded w | 16/12/2019 04:43
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Mexican Deputy ForeignMin: Mexico will never accept 'disguised' labour inspectors under USMCA
Mexico’s Deputy Foreign Minister for North America, Jesus Seade, tweeted out on Sunday, objecting a part in the new United States-Mexico-Canada Agreem | 16/12/2019 04:42
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Australia: Slowing economy wipes out billions from receipts outlook – ANZ
ANZ analysts note that Australia’s Government downgraded its expectation of the underlying cash surplus in 2019-20 to AUD5.0bn (0.3% of GDP) and acros | 16/12/2019 04:39
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Japan Tertiary Industry Index (MoM) came in at -4.6% below forecasts (0.7%) in October
Japan Tertiary Industry Index (MoM) came in at -4.6% below forecasts (0.7%) in October | 16/12/2019 04:32
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USD/IDR holds upside above 14k on dismal Indonesian trade data
According to the latest trade data published by the Indonesian Statistics Bureau, the country posted a bigger-than-expected trade deficit in November. | 16/12/2019 04:21
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Indonesia Trade Balance below forecasts ($-0.13B) in November: Actual ($-1.33B)
Indonesia Trade Balance below forecasts ($-0.13B) in November: Actual ($-1.33B) | 16/12/2019 04:18
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Indonesia Imports above forecasts (-13.32%) in November: Actual (-9.24%)
Indonesia Imports above forecasts (-13.32%) in November: Actual (-9.24%) | 16/12/2019 04:17
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EUR/USD: Inverted hammer on D1, flash PMIs eyed
EUR/USD chated a bearish inverted hammer candlestick pattern on Friday, aborting the immediate bullish view and establishing 1.12 as the level to beat | 16/12/2019 04:08
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Indonesia Exports registered at -5.67%, below expectations (-1.18%) in November
Indonesia Exports registered at -5.67%, below expectations (-1.18%) in November | 16/12/2019 04:04
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Fed's balance sheet may hit record high by May 2020 - Charlie Bilello
Federal Reserve's balance sheet may hit record highs above $4.516 trillion in May 2020 if the rapid pace of expansion witnessed over the last 3.5 mont | 16/12/2019 03:43
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