GBPUSD snaps 5 day winning streak

GBP/USD has slipped 0.2% across the morning session, slipping off 10-day highs after failing to break its 100 day moving average after Boris Johnson said he is not expecting anything special from EU talks.

Last week the pound rallied over 200 points from US$1.2870, its lowest level since November to $1.3070 on the back of a stronger than forecast GDP release and optimism of an expansionary fiscal policy following Boris Johnson’s cabinet reshuffle.

Sajid Javid’s surprise resignation and his replacement by Rishi Sunak was well received by pound traders. The power grab by No. 10 on the Treasury is seen as boosting the chances of increased fiscal spending; particularly important given that the Budget is due next month. Higher fiscal spending would take the pressure off the BoE to raise rates, thus lifted the pound.

Brexit

That said, any gains in the pound are and will be capped by fears that the EU is adopting a tougher negotiating stance ahead of complex trade talks due to start in March. Fears are also growing that Boris Johnson is aiming for a hard Brexit.

Data

On the data front last week figures showed that the British economy grew at a better than forecast 0.3%, whilst UK construction output increased +0.4% ahead of the -0.4% expected.

Pound traders will now look ahead to tomorrow’s employment figures, followed by inflation data on Wednesday. Expectations are for a fall in inflation which could drag the pound back towards $1.30.

Dollar holds steady

The US dollar is holding steady versus its major peers and fears over coronavirus ease and as investors look ahead to a quiet week on the data front. The release of the minutes from the January FOMC is expected to be a highlight and even then, no surprises are forecast. The Fed have re-affirmed their stance several times across recent weeks meaning the minute are not expected to unveil anything news.

Levels to watch:

Bull are awaiting a move above the 50 sma, in the meantime $1.30 is offering strong support. GBP/USD trades above its 200 & 100 sma. A move below the 100 sma could put the bears back in control

GBP/USD is testing support at $1.3009, the daily low. A breakthrough here could open the doors to $1.2943(13th Feb low) and $1.2917 (100 sma) before $1.2871 (Feb low)

On the upside resistance stands at $1.3053 (daily high) before $1.3070 (50 sma). A meaningful move above here could see resistance of $1.32 (high 3rd Feb) being tested.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.