Raphael Sonabend, FX Analyst
As this is our last report of the year we want to wish Merry Christmas and a Happy New Year to all our readers!
GBP/EUR: Currently trading at 1.2739
Today will be the busiest day for the UK for the rest of 2014 and as such trading will focus on these releases. This morning will bring the most recent UK current account figures, forecast to improve from -23.1B to -21.1B, it would not come as a big surprise if the deficit narrowed more than expected after net borrowing was below forecasts last week. Following this, BBA mortgage approvals and Final GDP will be released. Final GDP is likely to remain stable at 0.7% as has been the trend recently and BBA mortgage approvals has been predicted to improve from 37.1K to 37.3K.
Whilst Sterling has the potential to improve against the Euro on the back of this data, level trading that has been seen previously is likely to continue.
GBP/USD: Currently trading at 1.5586
Yesterday witnessed the dollar weaken against the pound as existing home sales figures fell from 5.25M to 4.93M, below the forecast level of 5.21M. Whilst this was the lowest annual pace since May, it remained up 2.1% compared to last November for the second consecutive month.
This morning’s UK releases, forecast to improve, could see Cable push up in the morning. These potential gains would be unlikely to last long as US core durable goods orders and final GDP releases are both forecast to increase. Whilst no one trend has been seen in this pairing, we anticipate that range-bound trading will be seen as 2014 draws to a close.
EUR/USD: Currently trading at 1.2234
This pair saw a half-cent rise in favour of the Euro yesterday morning before correcting back to around 1.2225. Poor US existing home sales saw little reaction in this pairing and in fact the dollar gained on the Euro soon after its release.
With today’s focus on US data, the dollar has the potential to push up against the Euro once again. Strong data forecast to be released in the early afternoon should be reinforced by new home sales, which is predicted to improve by 3K and would therefore consolidate potential dollar gains. Given limited reaction to yesterday’s data, it is probable that the markets will once again fail to react and this pair is likely to continue trading in a tight range.
GBP/AUD: Currently trading at 1.9183
Level trading was seen throughout yesterday’s session as no data was released to influence this pairing.
Today’s trading will focus on UK data, which is due to be released in the morning. As this data is forecast to improve, we could see a final pre-Christmas push by the pound against the Aussie. Whilst the Australian dollar is unlikely to be affected by US data, it is important to note that Japan does not have bank holidays this week and as the Bank of Japan’s Governor Kuroda is due to speak on Thursday morning, the Aussie could react to his words accordingly.
GBP/NZD: Currently trading at 2.0133
Old trends prevailed as volatility was seen in this pairing before closing the day at 2.0168 (opened at 2.0167). This volatile trading helped the pound post gains against the Kiwi however these were recaptured as Kiwi trade balance data rose to -213M from -911M. This was led by a fall in exports of 9.5% as dairy exports were down 27% and represented the lowest deficit in New Zealand since 2010.
The Kiwi’s gains extended into this morning’s session but are likely to be halted by UK data later. We expect that level trading will continue and the volatility in this trading will subdue as traders relax over Christmas however keen analysts will still follow the Japanese governor’s speech, which has the potential to affect the Kiwi.
GBP/CAD: Currently trading at 1.8107
Yesterday saw another day of range-bound trading in this pair as neither currency reacted to poor US data.
Today will bring UK data in the morning followed by the Canadian GDP this afternoon. With UK data forecast to improve and Canadian figures predicted to drop off, we could see a final pre-Christmas Sterling rally against the Loonie.
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