Analysis on pound

While the pound remains below 1.3950, it is vulnerable to further downturn, but if it breaks above this important level, it can expect more substantial recovery. Negotiations on the withdrawal of the UK from the EU are not going well, as the parties are still unable to reach an understanding on the single market, the customs union and the border between Ireland and Northern Ireland. Last week, there was no progress, and neither side is going to step back. The next important date for negotiations is March 22, when EU leaders will meet in Brussels to sign an agreement on the beginning of the transition period. They will also discuss the basic principles of conducting further negotiations on a number of issues, including trade.
The British economic data was not bad: activity in the service sector accelerated, judging by the latest index, and although the trade balance deficit has slightly increased, the volume of industrial production fell back at the beginning of the year. As there will be no fresh data in the UK this week, the GBP outlook is entirely dependent on the demand for the euro and US dollar. I expect that EUR/GBP will continue to fall in price.

The pound UK collapsed after GDP and retail sales

The pound lost 0.5% of its value after retail sales data in the country fell more than expected. This reduced the chances of an increase in interest rates at the next meeting, as was the expectation of the majority of market participants.
Retail sales in the country declined by 0.8% on a monthly basis in September, which was far worse than the average expectations for a 0.1% decline.
The growth of the British economy slowed to 1.5% yoy, in the third quarter, which was the weakest performance since October 2013.
According to Tuan Lan Nguyen, a currency strategist at Commerzbank AG, the data was quite disappointing and sent pounds down strongly against other major currencies. The expert doubts that with such data, the UK central bank will keep its promise of raising interest rates at its next meeting. However, he remains behind Commerzbank's medium-term forecast for an increase in interest rates.
The pound fell by 0.5% to 1.3135 against the dollar. With the same percentage, the pounds also fell against the euro to 89.69 pence per euro. Interest rates on 10-year British bonds fell four basis points to 1.28%.

Inflation in the UK highest in five years

Inflation in the UK rose to its highest level in five years in September, driven by accelerated food and transport prices.
The inflation rate rose to 3% in September on an annual basis, or the highest since April 2012, against 2.9% a month earlier, according to national statistics.
Data increases expectations for a raise in interest rates by the British Central Bank, perhaps next month.
The rise in the price of oil and petroleum products may mean that we will see further inflation in the future, according to market observers.
Now, inflation is a full percentage point above the target of the Bank's inflation rate of 2%.

The dollar stops with its growth

The dollar and interest on US bonds are on track to end their four-week rise after several Fed officials have expressed fears of inflation. This reduced the expectations for another US interest rate hike this year.
The euro has risen by about a cent above its seven-week minimum, reached in last Friday.
The pound has appreciated against other major currencies, following strong export growth in the country over the past month.
The appreciation of the British currency was also prompted by the speculation that Europe would offer the UK a two-year transition to leaving if Britain respects its financial obligations to the union.
The yen rose after the news of a slight earthquake as a result of North Korea's nuclear attempts. According to South Korea, however, the earthquake was the result of natural forces.

The pound has stabilized after better sales data

The pound continued its appreciation against the euro after better-than-expected retail sales in the UK in July.
The British pound cut off its five-day drop against the single currency after it became clear that retail sales rose by 0.3% on a monthly basis, against an expected 0.2% growth.
The results become a reality day after it became clear that Britain's unemployment rate has fallen to its lowest level since 1975, and salaries has seen higher than expected growth.
The euro fell by 0.2% against the pound to 0.9109 after adding 0.9% over the previous five days to Wednesday.
Meanwhile, the pound has stabilized against the dollar as well, trading at 1.2890 levels after having previously reached the lowest values of 1.2842 or levels unseen since July 12.

The prospects for the pound till the end of the year

The pound will most likely be the most volatile currency among the major ones. We have seen how the situation for the British currency can be radically different with every day and every statement of a major state functionary.
Uncertainty over the British currency is serious, and it will most likely continue to be preferred by hyper-speculators, as well as being avoided by investors who want more clarity about the direction of movement.
There are early elections in the country, which, however, are perceived as positive by market participants. We have already seen how one of the most bearish currency analysts, in the face of Deutsche Bank, has changed its expectations for the pound.

Forex forecast for GBP/USD for April 17 - 21, 2017

According to poll amongst forex analysts and looking at techical picture, the forecast for EUR/USD for the next week looks as follows:
A rebound was expected for the GBP/USD. The basis for such a forecast was a zone of strong medium-term support, near which there was the pair. The goal was the height of 1.2500, which the pair reached in the first half of the week, after which it took a breather for almost a day. And then, having gathered with strength, GBP/USD rose another 75 points higher, reaching a height of 1.2575 on Thursday.
In the medium term, almost 80% of experts expect the pair GBP/USD to fall (support levels are located at 1.2420, 1.2360 and 1.2110). As for the near future, most analysts (60%), supported by both oscillators and trend indicators, are inclined to the fact that the upward impulse has not yet exhausted, and the pair will reach at least the height of 1.2615. The next resistance is at the level of 1.2705.

The pound went up against the backdrop of rising activity in the services sector of Great Britain

On Wednesday, the pound rate rose to a maximum for the session after the report data recorded in March the maximum growth in the service sector of the UK for the three months of 2017.
At 08:50 GMT, the pair EUR/USD increased by 0.27% to 1.2473 from the previous value of 1.2435.
Markit reported that the index of business activity in the service sector (PMI) of Great Britain increased last month to 55.0 compared to 53.3 in February. This is the maximum after December 2016.
Economists predicted that the value of this index would be 53.5.
The report says that the rate of price increase has become the maximum for eight and a half years, which indicates a possible increase in inflation this year above 3%, as many economists predict.
The report also indicates that the growth rate of new jobs in the services sector has become minimal over the past seven months.
Together with data from similar studies on the manufacturing and construction sectors that were published this week, the latest report indicated the likelihood of a slowdown in economic growth as the consequences of the UK's withdrawal from the EU.

Inflation in the UK passed the limit of 2%

For the first time in three years, consumer prices in the UK recorded a growth of 2.3% yoy, as expectations were for 2.1%. Bank of England repeatedly hinted its willingness to tolerate exceeding goal inflation is limited.

On Tuesday the pound recorded strong growth, while GBP/USD rose by 114 pips, closing at 1.2471. The British pound was also supported with the exact date of activation of Art. 50 of the Treaty of Lisbon.

The euro continued to gain against the greenback and the EUR/USD rose to 1.0806 dollars per euro.

The dollar was subject to sales also against the Japanese yen, as USD/JPY fell over 70 pips, closing at 111,777 yen per dollar. According to Japanese analysts pressure on the greenback was due to falling yields on US bonds.
   
On Tuesday, gold rose by 0.85% at the beginning of the Asian session, the precious metal was subject to sales and reached 1226.91, but subsequently rose and closed at 1244.38 dollars per ounce. The gold price is sensitive to interest rate increases, but rate hikes are not expected in the near future, which explains the bullish sentiment of investors and analysts. Since the increase in interest rates last Wednesday, gold has increased by over 45 dollars per ounce.

GBP/USD may continue to decline

Sterling in tandem with the US dollar keeps negatively. The price chart has tested the support level in the area of ​​$ 1.2414. It is known that the index of retail sales came out worse than forecast, and thus disappointed the market participants.
It also shows that the price schedule is kept above the level of support and hints at the closing of short positions. If this trend will continue, it is still possible to prevent the purchase as part of speculative trading.
It is important to note that in the middle of next week's FOMC will held publication of the report. If the US dollar against the backdrop of this event will be strengthened, the sterling may continue the downward trend.

The dollar rose to 2-week high (Part 2)

GBP/USD exchange rate decreased by 0.27% to 1.2484.
National Statistical Service of the UK (ONS) on Friday reported an increase in production in the UK manufacturing industry by 2.1% in December against the forecast for increase by 0.5%. Compared with the same period last year, the volume of production in the UK manufacturing grew by 4.0% in December.
The report also stated that the UK industrial production rose by 1.1% in December against an expected rise of 0.2%.
According to the report, the UK trade balance deficit in December narrowed to £10.89 billion, compared to £11.56 billion on November (originally defined value in November was £12,16 billion). Analysts had expected, that the UK trade balance deficit in December was £11,50.
Currency pair USD/JPY rose by 0.17% to 113.45 - the highest value since February 1, and the USD/CHF fell by 0.19% to 1.0036.

The dollar lost positions

The dollar has reduced its growth against other major currencies on Friday after the publication of mixed data on US employment.
According to the report of the US Department of Labor the number of employees outside the agricultural sector in January increased by 227 thousand compared with the forecast of 175 thousand. In December, the revised number of people employed outside the agricultural sector amounted to 157 thousand (initial value - 156 thousand).
However, the same report showed that the US unemployment rate in January rose to 4.8% after the value of 4.7% in December. Analysts did not expected an increase in the unemployment rate in January.
The average hourly wage in the United States increased by 0.1% instead of the expected increase of 0.3%.
In recent weeks, the dollar remained under pressure against the background of the protectionist policy of US President Donald Trump and the ban on the entry of immigrants, which led to the general instability in global markets.
EUR/USD has remained stable closing the week at 1.0783, rebounding from a session low 1.0714.
GBP/USD ended lower by 0.30% to 1.2478.

The dollar is trading close to a 7-week low

The dollar is trading close to a 7-week low against a basket of other major currencies amid lingering concerns about the protectionist policies of Donald Trump.
The US Dollar Index, which shows the value of the dollar to a trade-weighted basket of six major currencies rose by 0.9% to 100.01 (after yesterday's low of 99.77 - the lowest value since December 8).
The decline of the dollar index reflects a concern about the uncertain Trump's economic policy, as well as fears that his protectionist stance can reduce corporate earnings and become a brake on economic growth.
On Wednesday, Trump confirmed plans to build a wall on the border with Mexico and has taken preparatory measures to combat illegal immigration.
The dollar rose against the yen: USD/JPY rose by 0.32% to 113.66, holding above a 7-week low of 112.51, recorded on Tuesday.
EUR/USD is down by 0.12% to 1.0737, close to a 7-week low of 1.0773 on Tuesday.
Pound updated 7-week high against the dollar. GBP/USD has risen by 0.21% to 1.2660.

The British pound rose to a 7-week high

The British pound rose to a 7-week high against the US dollar on news that British economic growth rates have exceeded forecasts in the fourth quarter.
GBP/USD pair peaked at 1.2673, which was the highest value since December 14, rising to 1.2634.
According to the National Statistical Service of the United Kingdom the gross domestic product grew in the fourth quarter by 0.6%, which exceeded the forecast value (0.5%) and repeated the values from the third quarter.
Hopes for certainty about the Brexit also contributed to the growth of the pound. The UK Government has stated that in the purpose of the approval by the Parliament, it will publish on Thursday a preliminary version of the decision on application of Article 50 of the Lisbon Treaty (formally run out of the EU exit procedure).

Pound rises after the speech of Theresa May

The pound rose significantly on Tuesday, reaching a maximum increase for one day since the beginning of 2009. This happened after the speech of Theresa May about the UK's withraw from the EU and the depreciation of the dollar against the backdrop of investors assess caused by the statements of the president-elect Donald Trump.
The pair GBP/USD rose by 2.66% to 1.2369, pulling back from Monday's low at 1.1985, which was the lowest value after the October crash.
This was the highest rise of the pound from January 2009.
During a speech in London May confirmed that Britain will leave the European single market after Brexit, but will try to keep the maximum access to the market due to new trade agreements.
She also announced that the final plan for Brexit will be voted in both houses of parliament.
Sterling rose sharply against the euro: EUR/GBP pair fell by 1.91% to 0.8633, before recovering after a 10-week high at 0.8851 reached on Monday.
Earlier, the British currency was supported after the publication of data on the highest inflation in the past month in the UK from mid-2014.
National Statistical Service of the United Kingdom reported that annual inflation accelerated to 1.6% in December compared with 1.2% in November. This is higher than the forecast of 1.4%.

British economy retains upward momentum (Part 2)

Inflationary pressure is strong in the industrial sector, where manufacturers are suffering from rising raw material costs, according to BCC price pressures is now the highest since the second quarter of 1997 onwards.

According to the survey, inflation has emerged as the biggest cause of concern for many companies. Companies from both industrial and the services sectors are under pressure mainly by rising raw material costs, which increases opportunity for profit and could weaken further investment.

Firms in the country have become slightly more optimistic about their prospects compared to the previous quarter, although their confidence in turnover and profits remained relatively low compared with levels in the last three years.

The latest quarterly survey by the British Chamber of Commerce covers more than 7,200 companies in the country and was conducted between November 7 and November 28, 2016.

British economy retains upward momentum (Part 1)

The British economy has maintained its upward momentum in the last months of 2016, but at the same time, inflationary pressure has increased with the robust pace of almost 20 years. This shows a survey of British Chamber of Commerce (BCC), released today and cited by Reuters.
British Chamber of Commerce said that sales and hiring improved slightly in the fourth quarter, which is another signal that Britain is likely outstripped growth in most of the developed economics past year. The latest quarterly survey, however, also indicates the presence of complications arising from the votes of the British referendum last June when Britons voted to leave the European Union.
According to BCC, a record number of manufacturers expecting price rises over the next three months. Most companies in the service plan to raise prices, and their number is the highest since the beginning of 2011 onwards.

Although British business reported a slight improvement in export sales in the fourth quarter, the Chamber of Commerce notes that there is still very little evidence that the weakness of the pound has provoked a boom in demand for British goods abroad.

The euro rose sharply against the dollar, catching traders by surprise

During the last for the year Asian trading the euro jumped dramatically against the US dollar, which caught traders by surprise, writes MarketWatch.
The cost of the euro flew in a few minutes from a level of $ 1.0490 to $ 1.0700, a maximum of 2 weeks. However, the rate quickly dropped to $1.0517 from $1.0490 at the close of trading prior to the closing of the trading year.
In tandem with the yen the dollar rose to 116.986 yen compared with 116.54 yen at the close on Thursday
The Pound Sterling, Australian and New Zealand dollars also rose to US currency.
The cost of the pound rose to $ 1.2346 from $1.2261 day earlier.
WSJ Dollar Index, which tracks the dynamics of the dollar against 16 major currencies, fell during the trading by 0,5%. The indicator, however, closed the year with increase by more than 3%.

Rabobank sees risk of returning of GBP/USD to 1.24 USD

The recent growth of the pound may be explained by the liquidation by speculators of accumulated large short positions and with it no new positive news from the political front in the UK, as the further strengthening of the pound seems unlikely, analysts say.

Despite the fact that currently the market is waiting for the Supreme Court of the country to take an unfavorable decision, this factor has already been calculated in the prices. In addition, it is unclear what position will take Britain into negotiations with the EU, analysts say.

They see a risk of returning of GBP/USD to 1.24 dollars over the next three months and believe that far until you have realistic prospects of keeping the access of the country to the EU single market, the growth of the pair to 1.30 dollars seems unlikely.

GBP

On Friday, the main news of the day was published data on GDP growth in the UK for the 3rd quarter. Q3 was the most difficult for England, which is primarily associated with the Brexit and, accordingly, with the significant devaluation of the GBP. In the first month of the quarter, there was a large outflow of foreign capital, it was provoked by the extremely negative forecasts of economists. Later it turned out that the devaluation of the GBP has had a more positive effect than negative, like increased domestic demand, increased inflation and stimulus measures taken by the Central Bank to improve the condition of the banking sector.
GDP also does not make exception - in the third quarter it grew by 0.5%, the value coincided with the previous period and forecasts.
As for the graphical analysis on the D1, it is believed that the pair has reached its local maximum, and now it expects the decline to the level of 1.2070 first, and then even lower - to the support of 1.1945. The nearest resistance - in the zone of 1.2495-1.2515, 1.2560 and 1.2675 next.