The Pound is afraid of new strains. Overview for 21.12.2020

GBPUSD is falling towards its two-week lows and may move much lower due to a harsher lockdown in the United Kingdom.

The British Pound is getting weak quickly against the USD on Monday afternoon. The current quote for the instrument is 1.3240.

The Brexit complications, which worried everybody last weekend, were put on the back burner because the United Kingdom is introducing a new lockdown due to a new COVID-19 strain, a more aggressive and mobile than the previous one. 

The Scientific Advisory Group for Emergencies (SAGE) has already reported that the strain that was identified in the United Kingdom has a very high attack rate and may infect many more people than expected earlier.

All somehow COVID-related severe restrictions will remain in effect until the vaccination procedure starts. However, there are no ready vaccines, which proved to be totally efficient.
In the meantime, December 31st, the date when the United Kingdom must exit the European Union after agreeing on all trade and economic issues, is just 10 days away.

All this taken together makes the Pound rather nervous with the possibility of further decline.

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The USD continues strengthening. Overview for 23.12.2020

EURUSD is falling while financial markets are becoming less active.

The major currency pair continues falling on Wednesday. The current quote for the instrument is 1.2182.

Yesterday, the USA reported on the GDP for the third quarter of 2020. After stimulus packages, the country’s economy added 33.4% q/q against the first estimate of 33.1% q/q. As a result, the third quarter completely eliminated the decline of the second one. So, the economy is still not alright but at least doesn’t look sick.

Later today, there will be more data from the USA and less time for work – the Catholic Christmas is almost here. America is planning to publish such reports as the Core Durable Goods Orders, which is expected to show +0.5% m/m in November after being +1.3% m/m the month before, and the Durable Goods Orders, which may add 0.6% m/m after increasing by 1.3% m/m over the same period of time.

Personal Spending is expected to lose 0.2% m/m in November after adding 0.5% m/m in October. On the other hand, Personal Income may lose 0.3% m/m after decreasing by 0.7% m/m over the same period.

Also. Investors will see the New Home Sales report, which is expected to fall a little bit in November, and the Revised University of Michigan Consumer Sentiment, which may correct down to 81.0 points in December after being 81.4 points in the previous month.

In other words, there will be a lot of numbers and market players will try to use the most interesting of them right here and right now because Christmas is around the corner.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound is consolidating. Overview for 28.12.2020

GBPUSD stopped growing; after the Christmas celebration, the asset is consolidating.

The British Pound slowed down its growth against the USD due to the Christmas calmness on the market. The current quote for the instrument is 1.3566.

So, the United Kingdom and the European Union managed to make a deal on the trade agreement just days shy of the deadline. The agreement, which has 1,246 pages, covers aspects of fishing, borders, and arguable points of trade relations. Starting from December 31st, when London is scheduled to exit the alliance, trade operations will be made without quotas and fees. However, it doesn’t cover services and financial proposals.

Probably, the catalysts for finding a final decision was the closure of the border between France and the United Kingdom due to a new strain of the coronavirus, which was considered by many as more aggressive and dangerous. It was a vivid picture of what might happen if the alliance countries had borders with the UK. Even if it didn’t happen, market players still had an excellent opportunity to see a possible collapse, which might have taken place without the Brexit agreement.

From now on, investors will have to go with the flow and just watch how the parties are going to fulfill their parts of the agreement. One can say almost certainly that there will be updates and revisions but they will deal with technical matters.

Reaching an agreement finally is a good sign for the Pound but later the British currency will bend with the wind.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro is going higher and higher. Overview for 30.12.2020

EURUSD is keeping its positive momentum in the middle of this year’s last trading week.

The major currency pair is looking good on Wednesday. The current quote for the instrument is 1.2281.

Those few investors, who are still on the market, remain quite positive but it’s not difficult due to celebrations of the catholic Christmas and New Year.

Another positive factor is the start of vaccination against the coronavirus in Europe and that’s an excellent reason for market players to buy. Europeans are very committed, that’s why there is a hope that lockdowns may be canceled much earlier than expected, thus helping economies to recover faster.

The Treasury Currency Report published by the USA yesterday didn’t leave any impression on market players.

Later today, one should pay attention to the Chicago PMI, which may fall to 56.6 points in December, and the Pending Home Sales, which may add 0.1% m/m in November after losing 1.1% m/m the month before.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound is slowly falling. Overview for 12.01.2021

GBPUSD is slowly falling being pressured by the USD and Brexit.

The British Pound is slightly retreating against the USD, thus building a new descending tendency. the current quote for the instrument is 1.3530.

On January 4th, the Pound “touched” the high at 1.3704, and then bears took charge.

Yes, the British currency is currently “suffering” from the USD strengthening. A positive effect of the Brexit deal made at the very end of 2020 by the United Kingdom and the European Union has been slowly fading away and may be replaced by concerns and carefulness. In addition to that, investors are worried about the possibility of implementation of negative interest rates by the Bank of England and that’s another risk that puts pressure on the Pound.

The fact that the United Kingdom may introduce more serious quarantine restrictions because of the coronavirus pandemic, means that the 1st quarter of 2021 may face a more significant slump than before. It’s a serious factor that puts much pressure on the British regulator’s stance – the BoE doesn’t want but has to consider different options, including the further loosening of its monetary policy as early as during the February meeting.

CFTC says that the bullish tendency in the Pound hasn’t been very strong for the fifth week in a row. It means that market players are very concerned about the Pound outlook and don’t expect it to grow in the nearest future.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The USD has taken the upper hand. Overview for 14.01.2021

A rebound in EURUSD was pretty short indeed; the USD is in demand again.

After a short correction, the major currency pair is back to falling. The current quote for the instrument is 1.2145.

The CPI and the Core CPI in America revived a little bit in December, just as expected. The indicators showed 0.4% m/m and 0.1% m/m respectively after being both 0.2% m/m in the previous month. Most likely, prices went up in December due to an increase in the petrol price.

Energies continue getting more expensive in January, that’s why another increase in the CPI may be expected later. 

However, this slight surge in inflation shouldn’t have any influence on the White House’s plans to implement the stimulus package. Of course, there are risks of accelerating inflation but they are quite small because the Core CPI didn’t change.

Expectations of the US economic recovery with a lot of help from the American government and the Fed were in favor of the USD despite lockdowns in Europe and a high burden of the COVID-19. 

Later today, the European Central Bank is scheduled to publish the Monetary Policy Meeting Accounts but it is very unlikely to contain anything that market players didn’t know before. In the evening, the USA will publish a weekly Unemployment Claims report: the indicator is expected to reduce a little bit and it might be a good signal.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro dropped to its six-week lows. Overview for 18.01.2021

EURUSD continues falling amid European lockdowns and expectations of a new stimulus package in the USD.

Early in another January week, the major currency remains weak. The current quote for the instrument is 1.2070.

The statistics published by the USA last Friday were rather mixed but market players are not taking heart and still hoping for the best. The US Retail Sales dropped by 0.7% m/m in December after being -1.4% m/m in November and against the expected reading of zero. The Core Retail Sales lost 1.4% m/m after reducing by 1.3% m/m the month before and against market expectations of -0.1% m/m. These declines mean that consumers are very cautious about the future economic outlook and don’t want to spend much money.

On the other hand, the Industrial Production in the USA added 1.6% m/m in December after expanding by 0.5% m/m in the previous month and against the expected growth by 0.5% m/m. The Capacity Utilization Rate rose from 73.4% to 74.5% over the same period.

A preliminary report on the Consumer Sentiment from the University of Michigan was an unpleasant surprise as it dropped to 79.2 points in January after being 80.7 points in December and against the expected reading of 79.5 points. It might not be very bad or scary for the beginning of the year but let’s wait and see what will happen next.

The key highlight of this week is the swearing-in of newly-elected US president Joseph Biden, of course. In his official comments as the country’s next President, Biden might talk about the stimulus package to be implemented in the nearest future – this is one of the reasons that provide the “greenback” with so much support these days.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound is slowly growing. Overview for 20.01.2021

GBPUSD has been slowly rising for the fourth consecutive trading session.
On Wednesday, the British Pound intends to keep its positive momentum against the USD. The current quote for the instrument is 1.3656.

The statistics published in the morning showed that the CPI in the United Kingdom was 0.6% y/y in December after being 0.3% y/y in the previous month and against the expected reading of 0.5% y/y. The Core CPI showed 1.4% y/y after being 1.1% y/y over the same period.

There is no threat of deflation right now and that’s good. The Bank of England, seeing the CPI becoming more active, won’t be pressured to expand the stimulus program. It’s a good signal and the regulator should be afraid that the indicator may boost – it will take care of itself later. 

The RPI was 1.2% y/y in December after being 0.9% y/y the month before.

After these reports were published, sentiments in GBPUSD didn’t change – investors are still buying it.

The latest data from CFTC says that an increasing number of investors are going bull and expecting the Pound to grow and reach the highs of March 2020. Mostly, they are hedge funds, which are sure of the vaccination effectiveness in the United Kingdom that may decrease pressure on the country’s economy and financial system due to the Brexit uncertainty – it already happened anyway.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Pound intends to keep rising. Overview for 22.01.2021

GBPUSD is correcting a bit on Friday after skyrocketing yesterday. However, the pair is clearly intending to keep its positive momentum.

The British Pounds is looking even more confident against the USD than before despite today’s correction. The current quote for the instrument is 1.3671.

After getting rid of significant Brexit risk pressure, the Pound has obviously reached some stability. The showdown between British and European politicians really made investors nervous and as soon as this issue was removed from possible market drivers and catalysts, the Pound’s behavior became more confident and understandable.

At the moment, the British currency is supported by the successful start of the vaccination against the COVID-19 in the United Kingdom. Britain was one of the most affected countries that had two lockdowns, that’s why it really needs to get rid of them as soon as possible.

The first results of the vaccination were positive and helped the Pound to update its multi-month highs yesterday. If the United Kingdom gets back in the groove of things by the second quarter of 2020, it will be excellent.

However, the statistics are rather mixed so far. For example, the CPI reports published earlier this week showed some improvement, which was quite good given the circumstances. On the other hand, the GfK Consumer Confidence published yesterday showed -28 points in January after being -26 points the month before. Everything related to consumers and their activity is rather unstable, and that’s a huge risk factor.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EURUSD is saving strengths. Overview for 26.01.2021

EURUSD is consolidating on Tuesday; investors are waiting for the news.

The major currency pair is barely moving on Tuesday morning in anticipation of the news. The current quote for the instrument is 1.2130.

The “greenback” managed to get much stronger yesterday amid increasing market volatility everywhere. Apart from this, the published statistics indicate problems with business activities in some European countries that are directly connected to lockdowns.

According to the European Central Bank Governor Christine Lagarde, the European economy may take more time to recover than expected earlier but it will recover. She believes that state authorities must continue stimulus programs, both fiscal and monetary. The European economy, as Lagarde sees, will be different after the pandemic and she thinks it will be good.

The ECB Governor is sure that the GDP reading for the fourth quarter of 2020 will be zero but in 2021 it will be positive as the region’s economy recovers.

Today’s economic calendar features the report of the Consumer Confidence from the Conference Board in the USA for January, which is expected to improve up to 88.9 points. The stronger the reading, the better for the USD.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Euro fell after the Fed meeting. Overview for 28.01.2021

EURUSD plunged after the January meeting of the US Federal Reserve.

The major currency pair stopped growing and started falling instead influenced by the Fed’s comments after its January meeting. The current quote for the instrument is 1.2090.

So, the Fed’s January meeting was rather neutral and the regulator kept the benchmark rate unchanged at 0-0.25%, and that’s the best variant for the American economy. The stimulus program continues and the Fed buys assets worth $120 billion every month. It’s huge money, which provides great support to the country’s economy.

In the comments that followed the meeting, the regulator said that some of the observations clearly indicated improvements in the economic outlook for the second half of 2021 but inflation was still below the target level of 2%. The country’s economy turned out to be more resistant to both external and internal factors than was expected earlier and that’s good news. According to the Fed’s estimations, the vaccination against the COVID-19 might force the pandemic to retreat, thus making a positive impact on the economy. Yes, the system is still quite far away from the Fed’s targets on inflation, employment, and some other aspects but the regulator continues working on that.

The USD managed to find support in these comments and rose against the Euro. The latter, in its turn, got under significant pressure after the German government deteriorated its GPD outlook for 2021 from 4.4% to 3% due to the lockdown.

The fact that the German economy is not the strongest one in the Euro Area anymore is the thing that one should get used to.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The Aussie is being pulled down. Overview for 01.02.2021

AUDUSD is slightly growing early in February but remains weak fundamentally.

The Australian dollar is trying to recover at least a little bit against the USD but it won’t be efficient without a good catalyst. The current quote for the instrument is 0.7651.

This week, Australia is scheduled to report on a lot of important macroeconomic indicators, which may significantly influence the national currency’s direction. It will be tough to fight the pressure from the “greenback” but the Aussie deserves a shot at it at least.

Earlier this morning, Australia published the AIG Manufacturing Index report for December, which showed 55.3 points after being 52.1 points the month before. It’s a quite significant improvement given Australia, just like many other export-oriented manufacturers, is constantly facing low consumer demand.

On Tuesday, the Reserve Bank of Australia will have another meeting, which is expected to be calm and quiet, in theory. The regulator is still assessing the economic climate and the health of the labor market before making any important decisions. The benchmark rate is highly likely to remain unchanged at 0.10%. The comments that will follow the meeting may contain the regulator's estimations of the employment sector, as well as information about trade and economic relations with China, Australia’s key partner.

The more neutral the meeting results, the better for the Aussie.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.