2024-05-10 10:00

GBP/USD and FTSE100 Analysis and Charts UK economy ‘going gangbusters’ – Office for National Statistics. Sterling underpinned, FTSE 100 continues to print record highs. The UK economy grew by 0.6% in the first quarter of the year, driven by a 0.7% increase in services output, beating analysts’ forecasts and ending the technical recession seen last year. Nominal GDP is estimated to have grown by 1.2% in Q1. According to ONS chief economist Grant Fitzner, ‘ to paraphrase the former Australian Prime Minister Paul Keating, you could say the economy is going gangbusters.’ Full ONS Q1 GDP Report Interest rate cut expectations were pared back marginally post-data. The first 25 basis point BoE cut is seen in August, although the June meeting remains a live event, with the second cut forecast for November. Cable (GBP/USD) moved slightly higher after the data release, helped in part by a weak US dollar. The 200-day simple moving average (1.2541) is now blocking a further higher and unless US data out later today weakens the greenback further, short-term cable upside may be limited. GBP/USD Daily Price Chart IG Retail data shows 57.48% of traders are net-long with the ratio of traders long to short at 1.35 to 1.The number of traders net-long is 9.60% lower than yesterday and 19.72% higher than last week, while the number of traders net-short is 2.23% higher than yesterday and 13.42% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. The FTSE 100 continues to post fresh all-time highs, with today’s GDP data sending the UK big board through the 8,400 barrier. The ongoing re-rating of the FTSE 100, and increased M&A activity has seen the index surge by around 1,000 points off this year’s low. Six green candles in a row underscore this week’s rally. Going into the weekend, the index may slow, but with UK economic confidence growing further, the outlook remains positive. FTSE Daily Price Chart What is your view on the British Pound and the FTSE 100 – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/uk-growth-surges-sterling-underpinned-ftse-100-prints-a-fresh-high-20240510.html

2024-05-10 08:12

Gold (XAU/USD), Silver (XAG/USD) Analysis Gold trades higher after data and central bank developments buoy precious metals Silver tests prior zone of resistance after latest bullish impetus US CPI data next week is the next potential market mover The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Gold Rises into the Weekend as Data and Central Bank Developments Buoy Precious Metals Gold has re-established its bullish momentum on the back of worse-than-expected US initial jobless claims data which adds fuel to the idea that central banks will soon be in a position to cut interest rates. Just yesterday the Bank of England hinted that interest rate cuts may materialise sooner than initially anticipated on the back of ‘encouraging’ inflation data in the UK. The medium-term inflation outlook printed within the 2% target (1.9% vs 2.3% in the February forecast), laying the groundwork for cuts. The overall feel of the BoE meeting had a sense that rate cuts are on the horizon provided the committee receive greater confidence that the persistence element behind inflation is dissipating. In the absence of any unwarranted inflation surprises, it would appear the committee is readying for a policy shift which tends to present a tailwind for the precious metal. In addition, the increase in initial jobless claims highlighted the weaker-than-expected NFP data for April. The job market has been resilient and the accumulation of these softer data points adds to growing calls for US rate cuts. As we head closer to these inevitable monetary policy shifts, expect markets to remain reactionary to incoming data. Next week US CPI data will be key in either extending the bullish move for precious metals or invalidating it. Gold Trades Higher but Can the Momentum Hold into Next Week? Gold trades higher, buoyed by central bank developments and weaker US jobs data. Another potential driver behind gold’s ascent is the Israeli advance into Rafah. Whenever escalations rise or a new phase of the conflict emerges, markets have added to gold positions ahead of the weekend as a hedge. Gold has bounced off the prior level of support at $2319.50 and tests the 161.8% retracement of the major 2020 to 2022 decline. Bullish momentum finds another test at the downward sloping trendline resistance drawn from the all time high but the RSI is yet to breach overbought territory – suggesting a bullish bias remains constructive. Support remains at $2319.50. Gold Daily Chart Source: TradingView, prepared by Richard Snow Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide: Silver Tests Prior Zone of Resistance after Latest Bullish Impetus Silver, much like gold, has enjoyed a rejuvenation of the broader bullish trend which tests the prior zone of resistance around $28.40, ahead of the high at $29.80. Similarly to gold, silver has risen off its recent swing low and also is yet to breach overbought conditions on the RSI. A weekly close above $28.40 keeps the bullish move alive into next week where US CPI could continue to drive the move higher if inflation pressures are seen to be decreasing in a significant fashion. Support lies at $27.40. Silver Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-silver-update-can-precious-metals-maintain-the-bid-in-the-coming-week-20240510-20240510.html

2024-05-10 00:35

Want to know where EUR/USD may be headed over the coming months? Explore key insights in our second-quarter forecast. Request your free trading guide now! EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD pushed higher on Thursday after bouncing off technical support at 1.0725, with prices challenging a key ceiling near 1.0790, where the 50-day and 200-day simple moving averages intersect. If this barrier fails to contain buyers, the next stop is likely to be trendline resistance at 1.0810. On further strength, we could see a move towards a major Fibonacci threshold at 1.0865. Conversely, should the market undergo a reversal and pullback, initial support emerges at 1.0725, followed by 1.0695. Vigorous defense of this floor is crucial for bulls to stave off a more significant drop; failure to do so could pave the way for a descent towards 1.0645. Subsequent losses may bring into play the April lows at 1.0600. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView USD/JPY TECHNICAL ANALYSIS Following a robust rally earlier in the week, USD/JPY took a breather on Thursday, displaying a lack of clear direction but maintaining a steady position above 155.00. If gains resume, resistance looms at 158.00 and 160.00 thereafter. Traders, however, must view movements towards these levels with caution, as Tokyo may step in again to support the yen, which could precipitate a swift reversal. On the flip side, if the bullish scenario fails to materialize and prices begin to head lower, the first support to keep an eye on appears at 154.65. On continued weakness, all eyes will be on 153.15, followed by 152.30-152.00, an important technical range, where the 50-day simple moving average aligns with a medium-term ascending trendline. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView GBP/USD FORECAST - TECHNICAL ANALYSIS GBP/USD sold off briefly on Thursday following the Bank of England's dovish guidance at its May monetary policy meeting, but later recovered all losses and broke above the 1.2500 mark. If we see a bullish continuation in the coming days, resistance lies at 1.2540, near the 200-day simple moving average. Above that, the focus will be on the 1.2600-1.2620 range. On the other hand, if sellers mount a comeback and drive cable lower, initial support may materialize around the 1.2500 region, followed by 1.2430. Bulls will need to defend this technical zone tooth and nail; any lapse may reinforce selling momentum, creating the right conditions for a pullback towards the April lows located around the psychological mark of 1.2300. GBP/USD PRICE ACTION CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-eur-usd-usd-jpy-gbp-usd-technical-analysis-and-price-outlook-20240510.html

2024-05-09 14:00

Japanese Yen (USD/JPY) Analysis and Charts USD/JPY rises for a fourth straight session Official commentary out of Japan suggests more action to weaken it could come The US for its part has said intervention should be ‘rare’ The Japanese Yen continues to weaken against the United States Dollar, with the market seemingly more than ready to test the authorities in Tokyo in their efforts to slow its decline. USD/JPY has climbed to highs not seen for more than thirty years in 2024. This long rise finally prompted a multi-billion-dollar intervention in the foreign exchange market last week to knock it back from the Bank of Japan and the Ministry of Finance. Tokyo argues that the Yen’s fall is disorderly, out of line with market fundamentals, and risks stoking more domestic inflation via an increase in exported goods' prices. For its part the United States seems unlikely to tolerate repeated interventions. Treasury Secretary Janet Yellen said last week that official action in the currency market should be ‘rare.’ The possibility of a spat between the two economic giants over the issue will keep traders very much on their toes when it comes to USD/JPY. Despite the Bank of Japan’s historic step away from ultra-loose monetary policy this year, the Yen still offers miserable yields compared to the Dollar. It seems probable that those yields will get less miserable, perhaps in the quite near future. But the Dollar looks set to keep its monetary edge for some years, which makes a weaker Yen all but inevitable. USD/JPY has not retried the dizzy heights above 158.00 scaled in late April before Tokyo stepped in with its billions. However, it remains above 155.00 and clearly biased higher. The very best Japanese policymakers can hope for absent some reason to sell the Dollar more broadly is to slow the rise in USD/JPY. Thursday saw the release of the Bank of Japan’s ‘summary of opinions’ from its April 26 rate-setting meet. Members discussed possible future rate hikes if Yen weakness persists and stokes imported inflation. With so many moving parts in play for the Yen right now, it could be a volatile time for the currency and trading warily is advised. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView The pair has bounced back into a better-respected and possibly more meaningful uptrend band within its overall rising trend. This narrower band has so far been quickly traded back into whenever it has been abandoned and now offers support at 154.055, with resistance at the upper bound coming in at 157.263. Of course, forays as high as that would seem to run the risk of meeting some Dollar selling from the Japanese authorities, at least in the short term. Last Friday saw the Dollar bounce exactly at its 50-day simple moving average, support that could remain significant. It now lies at 152.25. Even a slide that far would keep the broader uptrend very much in place. Retail traders seem to doubt that the Dollar can go much higher now, with a clear majority perhaps unsurprisingly bearish at current levels. This might indicate that Tokyo’s action is having at least some effect in slowing the Yen’s decline. --By David Cottle for DailyFX https://www.dailyfx.com/news/japanese-yen-weakens-again-despite-clear-chance-of-further-intervention-20240509.html

2024-05-09 11:34

Bank of England Votes 7-2 to Hold Rates The Bank of England added another vote in the ‘cut’ camp as Dave Ramsden joined Swati Dhingra in calling for a rate cut on Thursday. Before the media blackout period, Ramsden communicated optimism around inflation hitting the 2% target and remaining there for an extended period. His comments contrasted with the February staff forecasts which saw inflation plummeting to the 2% target but then rising above for an extended period. The medium-term inflation projection (i.e. two years ahead) came in under the 2% mark at 1.9% to provide even greater confidence that the Bank is making progress in the battle against inflation. Cross-Market Reaction (5-Minute Charts) Cable was seen lower in the moments following the announcement with commentary from BoE Governor, Andrew Bailey due at 12:30 UK time. EUR/GBP also witnessed a bid while the FTSE was only moderately improved on what has been an impressive move higher in recent trading days. Source: TradingView, prepared by Richard Snow Implied Basis Points into the end of the Year Markets now imply a 44% chance of a rate cut in June with a cut fully priced in by the end of the August meeting. Source: Refinitiv, prepared by Richard Snow Lingering Concerns Over Services Inflation Remain With forecasts suggesting inflation will speedily move towards the 2% target and growth remaining subdued, it may seem a mystery why there isn’t more of a motivation to cut interest rates. The quick answer is that services inflation is still a problem for the committee as it remains elevated, at 6% (yellow line). Wage growth, the grey line, (average earnings including bonuses on a rolling 3-month basis) has moderated to a more tolerable 5.6% but has also attracted the attention of the BoE in recent meetings and the committee will be looking for further progress in the data on Tuesday next week. Source: Refinitiv, prepared by Richard Snow In the lead up to the announcement sterling weakened against the US dollar and was generally trading lower against a basket of G7 currencies. The weaker pound naturally buoyed the FTSE index, which has enjoyed an extended period of gains, ultimately seeing it reach a new all-time high. Cable had been hovering around that 1.2500 level ahead of the meeting as market participants wait for directional clues from the BoE. The pair broke down after trading within a broad range for most of the first quarter which extended into April too. With the Fed in no position to cut rates, focus turns to other major central banks like the BoE to gauge how soon they will be in a position to realistically lower the interest rate. When other central banks are likely to cut, interest rate differentials are likely to help steer FX markets, with cable likely to experience further softening when the Bank communicates a greater urgency to lower rates but this effect may be marginal seeing how closely aligned UK-US rates are currently. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow The FTSE has enjoyed a period of positive performance and continues to trade well within overbought territory. The current trend reveals few, if any, signs of a slowdown. FTSE Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/boe-holds-rates-steady-inflation-outlook-and-vote-split-hint-at-june-cut-20240509.html

2024-05-09 07:43

GBP/USD Analysis and Charts BoE voting patterns and the Quarterly Report key for Sterling. Sterling’s upside looks limited. For all central bank meeting dates. See the DailyFX Central Bank Calendar Today’s BoE decision (12:00 UK) is expected to see the central bank leaving all policy dials untouched but the MPC may give some hints about when UK monetary policy may change. The nine-member MPC vote in March saw eight members vote to keep rates unchanged and one member in favour of a 25 basis point cut. If other MPC members join Swati Dhingra in voting for a cut, Sterling could slide, in the short-term at least. The latest Quarterly Report will also be released today and this will include updated forecasts for GDP and inflation for the next three years. UK inflation is seen falling further, and sharply according to Governor Bailey, and next year’s inflation forecast may well fall below the central bank’s 2% target. The short end of the UK gilt market will give a better outlook for rate expectations after the report is released. Sterling is likely to slip further unless the BoE unexpectedly takes a hawkish turn, and this could see GBP/USD dipping back below 1.2400. Cable is testing the 20-day sma and a break below would see the pair below all three simple moving averages, giving the market a negative bias. If GBP/USD breaks 1.2400, then 1.2381 comes into view ahead of the multi-month low at 1.2300. GBP/USD Daily Price Chart IG Retail data shows 60.77% of traders are net-long with the ratio of traders long to short at 1.55 to 1.The number of traders net-long is 8.88% higher than yesterday and 24.63% higher than last week, while the number of traders net-short is 1.50% lower than yesterday and 5.46% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. EUR/GBP has been pushing higher, despite the market fully expecting the ECB to start cutting rates in June. EUR/GBP is currently testing the 200-day sma and a break above leaves 0.8620 as the next target. Above here, the late March double-high at 0.8644 comes into play. EUR/GBP Daily Price Chart What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/gbp-usd-eur-gbp-outlooks-as-bank-of-england-decision-nears-20240509.html