Subscribe to RSS

GBP/USD forecast: Weak UK wages could kill Sterling

GBPUSD

The sell-off in Sterling was one of the main story in the FX markets on Tuesday. A surprising negative inflation number in the UK, coupled with a drop in the core inflation saw the GBP/USD pair drop to 1.5248, where it consolidated for an hour or so before extending the drop to 1.52 levels on the back of dovish comments from BOE’s McCafferty. But profit taking and speculation of uptick in the UK monthly wages pushed the pair back to 1.5280 levels in Asia today.

Weak wages could spell disaster for Sterling

The UK wage growth data could turn out to be a make or break number for Sterling. Low inflation, slowdown in the activity, global risks, high trade deficit, dovish Fed and ECB are all pointing to a delay in the BOE rate hike. The only factor, which BOE’s Carney too reiterates time and again, is the rise in the wages. If the wage growth accelerates as per forecasts, then Sterling could re-test the area around 1.5360.

However, the odds of a weak number are high, given the economic activity has slowed down recently. In this case, Sterling is likely to take out 1.52 levels to test 1.5163 (Sep 4 low). The fall in the GBP/USD could turn out to be on of the biggest in case the weak UK wage data is accompanied by a strong US monthly advance retail sales report, due later in the day.

Technicals – Eyes 23.6% retracement support

Sterling’s repeated failure to close above 1.5360 (76.4% Fib expansion of Jun high-July low-Aug high), followed by a break below 1.5248 (50% of Apr-Jun rally) indicates a short-term could be in place at 1.5387 and the pair could drop to 1.5185 (23.6% of Jul 14-Apr 15 plunge). On the other side, a break above 200-DMA could open doors for a re-test of 1.5360-1.5387. However, buying interest could catch fire only if the daily close today is above 1.5387.

EUR/USD Analysis: Supported by risk aversion, Eyes US retail sales

EURUSD

The EUR/USD rose to an intraday high of 1.1411 despite weak German data. The German ZEW survey fell sharply in October, reflecting deterioration in investor sentiment. The drop was anticipated given the dismal economic figures out of German offlate. Moreover, Europe’s exposure to China an the resulting risk aversion in the markets yesterday kept the EUR on a strong footing.

Focus on US retail sales figure

The advance retail sales figure in the US is the second most important piece of data after non-farm payrolls. The domestic consumption needs to spike if the Fed wants to raise rates, more so, because the resulting rise in the USD in anticipation of rate rise could kill the already weak exports amid aggregate demand deficiency in the global economy. However, so far, the domestic consumption has stayed anaemic.

A 25 bps rate hike is not expected in 2015. The probability of the same is seen in March 2016. In case, the retail sales contract, the March Fed rate hike bets could go out of the window and lead to USD weakness against EUR (funding currency) and safe havens – JPY, CHF. However, the USD still would remain strong against risk assets due to the safe haven appeal of the treasuries.

Technicals – Bullish momentum seen above 1.14

Euro remains firmly in the grip of bulls, although the EUR/USD pair lacks momentum to take out 1.14 and head towards 1.1460. The spot has failed for two consecutive sessions to sustain above 1.14, leaving it exposed to a bout of profit taking in case it fails again near 1.14. The downside appears capped around 1.1318 (red trendline support on the chart), while an hourly close above 1.14 could be enough to push the pair to 1.1460.

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$20 Trad able Free Forex No Deposit Bonus – Continue Fx

$20 Trad able Free Forex No Deposit Bonus – Continue Fx(0)

$20 Trad able Free Forex No Deposit Bonus on sign-up applicable on first trading account. Start trading with the $20 Trad able Free Forex No Deposit Bonus amount, you can withdraw you profit amount any time of the day. Link:  $20 Tradable Free Welcome Bonus Available to: All new trading account Bonus offer: $20 Trad

Up to 200% Withdrawable Cashback Rebates – ForexTime

Up to 200% Withdrawable Cashback Rebates – ForexTime(0)

Always aims for profitable promotions for ForexTime Customer, this time they have come up with a 200% Cashback rebate bonus promotion which enables traders to earn up to 10,000 USD withdrawable Cashback bonus. Link:  Receive $30 Tradeable Credit Bonus Link:  FX Circuits Live Trading Contest Link:  Demo Forex Trading Contest Link:  Loyalty Cashback Promotions Link: 

50 USD No Deposit Bonus Trading with Bitcoin – UFX

50 USD No Deposit Bonus Trading with Bitcoin – UFX(0)

Start Forex Trading Bitcoin with UFX and Get a $50 Free Bonus. $50 Free Bonus is subject to your phone verification with UFX Account funding in Bitcoin requires a Bitcoin wallet Link:  $50 Forex No Deposit Bonus Promotion Link:  $50 Free No Deposit Bitcoin Bonus Link:  100% Real Money CashBack Promotion Available to: All new

Start Forex Trading with to get $100 Free Bonus – ACY

Start Forex Trading with to get $100 Free Bonus – ACY(0)

Start Forex Trading with ACY to get $100 Free Bonus. Initial deposit greater or equal to $400, you can claim $100 Forex Free Bonus. Link: Start Trading with to get $100 Bonus Available to: New and Existing clients Ending Date: 31 December 2017 Bonus Offer: Start Forex Trading with ACY to get $100 Bonus to

$888 Extra Forex Bonus Amount Promotions – FortFS

$888 Extra Forex Bonus Amount Promotions – FortFS(0)

$888 Extra Bonus Amount Promotions, All accounts take part in the 888 Extra Bonus Amount Promotions with the exception of Newbie, PRO and STAR live accounts. Link: $888 Extra Bonus Amount Promotions Link: $5 Forex No Deposit Welcome Bonus Link: Up to 50% Bonus of Every Deposit Link: 15% Support Margin Deposit Bonus Available to:

Deposit $500 to Receive a $350 Special Bonus – AvaTrade

Deposit $500 to Receive a $350 Special Bonus – AvaTrade(0)

Deposit $500 to receive a $350 Special Bonus up to 14000. This 35% Special Bonus Promotion is available to USD, EUR, AUD and GBP base currency accounts Link:  100% Bonus to Your First Deposit Link:  30% Sign-up Bonus on your Deposit Link:  30% Enjoy Reduction on Spreads Available to: All new account Ending Date: 31

$50 No Deposit Forex Cash Bonus today – Vantage FX

$50 No Deposit Forex Cash Bonus today – Vantage FX(0)

Open a live trading account and claim your $50 No Deposit Forex Cash Bonus today. $50 No Deposit Forex Cash Bonus is valid for two calendar months from the date it is credited to your trading account. Link:  $50 No Deposit Forex Cash Bonus Available to: New and Existing clients Ending Date: 31 December 2017

Forex Monthly Live Trading competition – Tickmill Ltd.

Forex Monthly Live Trading competition – Tickmill Ltd.(0)

Forex Monthly Live Trading Contest. Put your forex trading skills to test and win up to $1000 every Month! Forex Live Trading Contest is only available for clients of Tickmill Ltd.(FSA Regulated) Link:  Weekly Demo Race Trading Contest Link:  $30 Free Welcome Bonus Offer Link:  Forex Monthly Live Trading Contest Available to: All new traders

50% Deposit Bonus and $30 Free Trading Bonus – XM

50% Deposit Bonus and $30 Free Trading Bonus – XM(0)

Get 50% Deposit Bonus and $30 Free Trading Bonus. XM offers its clients multiple trading benefits to stay at XM, starting with a $30 Free Trading Bonus “No deposit required” Link:  $30 Forex No Deposit Bonus Link:  50% Deposit Bonus up to $500 Available to: All new trading account Bonus offer: 50% Deposit Bonus and

$50 Forex No Deposit Bitcoin Bonus Promotions – UFX

$50 Forex No Deposit Bitcoin Bonus Promotions – UFX(0)

$50 Forex No Deposit Bitcoin Bonus Special Promotion to all new trading account holder. Start Forex Trading Bitcoin with UFX and  Get a $50 No Deposit Bonus Link:  $50 Forex No Deposit Bonus Promotion Link:  $50 Free No Deposit Bitcoin Bonus Link:  Halloween Trick or Trade Competition Available to: All new trading account Ending Date:

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories