Gillian BlorePOUND STRENGTH STALLS
Fireworks, as expected, last week Thursday with the GBP strengthening to 0.8284 before ending the day 1% weaker against the EUR
Will the pound have another attempt at reaching pre-Brexit levels?
Calm waters expected until US inflation data on Thursday
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Economic Calendar:
THURSDAY, FEBRUARY 10
09:00 EUR Various ECB speeches
13:30 USD CPI
13:30 USD Initial jobless claims
FRIDAY, FEBRUARY 11
07:00 GBP GDP
07:00 GBP Industrial production
07:00 GBP Manufacturing production
TUESDAY, FEBRUARY 15
07:00 GBP Average earnings
07:00 GBP Claimant Count
07:00 GBP Unemployment Rate
10:00 EUR GDP
13:30 USD PPI
EURGBP
Last week we highlighted the significance of the UK and European rate announcements, and the EURGBP currency moves on the day did not disappoint. The EURGBP pair touched lows of 0.8284 following the surprise hawkish stance by the Bank of England. 4 of 9 voting policy members voted in favour of an increase to 0.75%, in turn raising expectations of future interest rate hikes. However, previously renowned for their dovish rhetoric, the ECB also came out more hawkish than expected. The GBP reversed its prior gains, to close the day 1% weaker against the EUR. In the chart below we spoke about the significant level the EURGBP pair was trading at - a 5.5 year low. An important inflection point for the GBP to either continue its strength and see pre-Brexit levels, or to bounce weaker resuming to its prior trading range. The 0.83 level held and the pair is now hovering around the 0.84 area. On the upside 0.855 is likely to keep the cap on any further GBP weakness, however, below 0.83 we can expect the prior GBP strength to resume and to potentially once again see pre-Brexit levels.
GBPUSD
Although slightly stronger vs. the USD over the past week, the GBPUSD pair continues to bounce around in a very tight range, currently trading at 1.3540.
1.38 is keeping the lid on the upside, while 1.33 continues to offer support. On Thursday we have US inflation numbers, as well as UK GDP and production numbers Friday morning. These economic data prints may be the catalyst to spark a new trend change. Political news aside, calm waters are expected until Thursday afternoon.
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