GBP Bounces Back
The British Pound is stabilizing today following a shar drop yesterday as traders speculated that the UK chancellor might be forced out of her role. Emotional scenes during the UK PMQs yesterday sparked a heavy unwinding of GBP longs as traders drew their own conclusions from footage of the tearful UK chancellor in parliament amidst uncertainty over whether the UK PM was backing her or not. Reeve’s commitment to fiscal discipline has been seen as a strong upward driver for GBP and speculation that a replacement chancellor might be less fiscally responsible and more open to increasing borrowing, weighing on the GBP outlook. Today, however, GBP is rally in response to news that the PM is backing Reeves.
Dovish BOE Comments
Away from the political sphere, GBP was also rocked by dovish comments from the BOE this week. Speaking at the ECB’s Sintra panel, BOE governor Bailey reaffirmed his view that the trajectory for interest rates is lower but warned that it was still too early to properly assess the inflationary impact of tariffs. Speaking away from that panel, we then heard BOE’s Taylor voicing support for faster rate cuts in the UK amidst the risk of a hard landing for the economy.
US Jobs on Watch
Looking ahead today, GBPUSD will be very much driven by the USD response to incoming US jobs data. If the NFP is seen falling again, particularly if there’s a downside surprise, this should see USD come under heavy selling pressure, allowing GBPUSD to recover further.
Technical Views
GBPUSD
The sell off in GBPUSD has found support for now into the 1.3631 level. While this support holds, focus is on a fresh push higher with 13839 the next target for bulls. To the downside, deeper support at the 1.3427 level and bull trend line will be the key pivot for bulls to defend to maintain the upside focus.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.