Sterling increasingly pressured towards new long-term lows

12 August, 2016

Sterling increasingly pressured towards new long-term lows

The Bank of England’s interest rate cut to a new record low of 0.25%, and other stimulus measures implemented by the UK central bank last week in response to June’s Brexit decision, prompted even more pressure on sterling than had already plagued the struggling currency.

After last week’s rate cut, the British pound fell swiftly against its chief rivals – the US dollar, euro, and yen – prompting the pound to re-approach its recent long-term lows against these other major currencies.

As of this writing, GBP/USD has dropped below the key 1.3000 psychological level, which has opened the way for a further potential fall towards July’s post-Brexit 31-year low of 1.2795. Similarly, sterling has continued to fall precipitously against the euro, as EUR/GBP rose further on Thursday to re-test July’s multi-year high of 0.8626.

Even more so than GBP/USD and EUR/GBP, however, the currency pair that has arguably been affected most severely in the post-Brexit environment has been GBP/JPY. From the exceptionally sharp Brexit-driven dive in late-June to the current slide since late-July, GBP/JPY has mostly shown a singular bearish bias that has been even stronger than many have anticipated. This has been due both to tremendous pressure on the pound as well as a consistently strong Japanese yen that was helped along initially by its status as a safe-haven currency during post-Brexit volatility.

GBP/JPY now appears likely to continue its robust downtrend that has been in place for more than a year. The currency pair has currently extended its recent slide to approach major support around the psychologically-significant 130.00 level, which is in the vicinity of July’s multi-year lows. A strong breakdown below 130.00 would result in a further extension of the year-long downtrend, with the next major downside target around the key 125.00 support level.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: