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GBP/USD Forex Market Continues to Show Weakness

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GBP/USD Forex Market Continues to Show Weakness
  • The pair continues its fourth consecutive day of losses
  • Iran tensions still at the forefront of concerns
  • Further hit by weak UK GDP figures release

The current tumultuous fortune of the British Pound has continued on Monday with the currency further slipping in value against the US Dollar. At the time of writing, the pair sit at a very low ebb having sunk below $1.30. This marks the fourth consecutive losing day for the pair as fears in the market continue to mount. Geopolitical as well as economic concerns have all converged in something of a perfect storm for the GBP forex market of late.

Yet another down day for Sterling

Put bluntly, the GBP forex market had been desperate to stay above the milestone $1.30 mark following three consecutive days of loss-making. The early trading on Monday however, all pointed in one direction. This was, unfortunately, the wrong one for the pound as it slipped further.

It seems that in recent days, even the relative weakness of the US Dollar on the other side of the trade has gone unnoticed by the market. After the Americans had posted weak employment data and a declining wage growth figure of 0.1% on Friday, many may have expected the Pound to pick up the slack. This has not been the case though. Instead it has retreated below what could be a psychologically significant point in the coming period.

Iran relations a key factor

Following the Iranian retaliation on US bases in Iraq last week, there has been global uncertainty surrounding the stability in the Middle East. This has applied pressure to both the global oil price and to major forex markets. As a key ally of the United States, the UK has no escaped from this situation.

This has furthered heaped pressure on a GBP forex market that has seen more than its fair share or geopolitical hurdles in recent months thanks to the ongoing Brexit debacle. These concerns, despite a short-term lift following the resounding conservative election victory, just will not shift. Irish Deputy Leader Simon Coveney has become the latest to express doubt that the December 31st transitional deadline to completely leave the European Union.

Poor GDP figures the final straw for the Pound

A miserable Monday for GBP trading was compounded as early as 10 am GMT when poorer than expected November GDP numbers were released for the British economy. These showed that while the overall economy had grown, the GDP had fallen 0.3% in November. Analysts have been disappointed by these figures which were not expected to show any losses from the nation’s GDP.

All of these factors have given rise to increased talk of an imminent interest rate cut from the Bank of England. This would certainly help to provide some much-needed positivity and hopefully swing market sentiment back to the positive side as we head forward into 2020.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

Forex

EUR/USD Making a Recovery in the Daily Forex Market

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EUR/USD Making a Recovery in the Daily Forex Market
  • EUR/USD Price Continues to Improve on Market Open
  • Traders Cashing in on Gold Gains
  • Coronavirus Still Impacting Market Sentiment

 

The EUR/USD forex market has continued to improve slowly but surely over the last few trading sessions. As the European session opened today it still managed to cling onto the gains of the previous few days. This comes despite the worsening situation in Italy where the coronavirus outbreak is playing havoc with one of the largest economies in the EU. This latest news threatens to plunge the country back into a recession from which they only recently emerged.

US Dollar to Continue as Beneficiary

As markets in Europe await the release of German GDP data and consumer confidence data from the US later in the day, the Dollar stands in a unique position. With Europe and most of Asia consumed with health concern, the currency looks set to continue in its safe haven role. This has come to look even more certain with the rollercoaster that European traders endured through Monday trading.

Even though the American stock market has been in a turbulent mood, particularly yesterday, it is the currency that will continue to hold up as a safe option for traders looking to weather out the storm. The CB consumer confidence data to come today to come today will also go a long way to steadying the ship on Wall Street if it comes out more positive than expected.

Gold Prices Start to Consolidate

The USD was not the only market to see a boost from the ongoing situation. Gold has always been perhaps the number one safe-haven in times of market uncertainty. This was proven again in recent days with the price taking off to new highs. This has begun to consolidate today as traders have decided on taking some profits. This has seen the price retreat marginally from the seven year high reached on Monday.

The commodity still remains around the $1650 mark, though barring any catastrophic news from Europe in particular today, many analysts feel this is likely to see another slight decline to the nearby resistance levels. This too will depend a lot on the morning data from the US market as well as the final German GDP numbers to come.

Looking Ahead

In the current market and general economic climate, it seems that the only certain thing, is more uncertainty. Much will rely again on geopolitical factors more than economic data in what is a relative sparse week on the economic calendar. This could be a positive in the sense the forex market will have some space to contend with whatever news comes without much additional worry from economic data.

Besides data releases from German, Australia, and Canada to come throughout the week, a particular focal point given the current Eurozone issues may be Wednesdays address from the President of the ECB, Christine Lagarde.

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Asian Economy and Forex Market Crippled by Virus Spread

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Asian Economy and Forex Market Crippled by Virus Spread
  • Japanese Yen in critical struggle
  • South Korean exports also slump
  • USD safe haven the preference for most

As the week began, many had thought and hoped that the ongoing battled waged in China against the Coronavirus was beginning to settle down. Markets continued to operate with no major downturn as Beijing appeared to be controlling the situation well. The economic situation in China sees no major change, but that of its neighbors in the Asia Pacific region has been turned upside down as we near the weekend. Two deaths in Japan and a surge in cases from neighboring Korea have suddenly thrown the region into a very difficult economic position.

Japanese Yen and Economy Fighting a Battle

Typically a renowned safe haven in times of trouble, the Japanese Yen has endured its worst 4-day run in more than 2 years. The currency which is usually notoriously stable, has shed more than 2% in this short period. Prior to a slight rebound in today’s market trading, a sense of panic could be felt among traders. This fall is of course related to the current situation and compounded by how the virus has hit both trade and tourism.

Fears of a recession are high, with even David Bloom the head of FX at HSBC commenting that “New Coronavirus cases in Korea and Japan have given people cold feet regarding Japan and the Yen as a safe haven”. This certainly appears at least for the moment, to be true.

South Korea another Victim

The most notable spike in virus cases within recent days has come from South Korea. Cases there have almost doubled in just a 24 hour period. This, alongside comments from the director general of the WHO about how cases could see a further sharp increase have seen Korean markets down almost 1.5% overnight.

Traders and the wider public will certainly hope that the director generals words do not ring true, although the country have already noted a severe drop off in exports to China for February thanks to the disruption of supply chains. South Korea can play a key linking role in the region and so, it is no surprise to see the market react in such a way with the surge.

USD the Choice for Many in an Uncertain Market

With confidence low in the JPY ability to act as a safe haven at the moment, the USD has gained some strength in this regard. The currency has continued to trade steadily in a positive manner throughout the crisis as traders put their faith in the greenback.

This trend is expected to continue at least until the virus fears begin to subside. Quite when that will be though, and what damage will have been done to the world’s economy by that time, few can estimate.

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GBP/USD Forex Market Back Above Key Level

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GBP/USD Forex Market Back Above Key Level
  • Market jumps back above important 1.30 figure after shaky start
  • Pound buoyed by positive CPI
  • No Deal Brexit and China fears still holding traders


The GBP/USD has begun to climb again after a protracted period of uncertainty which has seen it hover around a key benchmark area. 1.30 has been a sticking point for the market over recent days and weeks. This is no surprise given the level of uncertainty that has plagued the geopolitical scene of late. A turbulent Brexit was finally brought to pass, this though is far from done with many of the key negotiations still to come before the end of 2020.

USD Silence Helps the Climb Back

The currency pair is in fact reversing the previous day’s session that saw it close below this key point. It is doing so with the help of a very quiet USD currency and market. This could be related to the news earlier in the week of a revenue warning from Apple. With the DOW Jones, and NASDAQ also down, it is possible that traders are giving the market a slightly wide berth for now and waiting for some more positive news on the global stage.

Consumer Price Index Boost for GBP

The strength of the Pound in this pair can be somewhat attributed to the recent release of economic figures more than the current and ongoing post-Brexit negotiations. Both the CPI (Consumer Price Index), and PPI (Producer Price Index) which measure how price rises and inflation impact both parties, came in stronger than expected.

While this may not spell great news for British consumers at the checkout with inflation reaching a high point, it has given the currency a boost. This number may show that UK production and consumer spending have been very healthy in real terms.

The British CPI managed to jump 1.8% in its year-on-year number for January. This is steadily more than the 1.3% rise of the previous year and again more than the 1.6% expected. All in all, a potential rise in consumer confidence may be garnered from these figures.

Still Worries on the Horizon

Despite the positive movements of the day, there are still challenging points for the pair, and the wider economy to deal with. On a somewhat domestic level, the ongoing negotiations about the future UK relationship with the EU are set to drag on. Latest headlines today show that the UK remain committed to a points-based entry system that will severely limit opportunities to unskilled worked from outside the country.

Finally, in China, there is still the ongoing issue of the Coronavirus. Catching few headlines but the virus is still serving to restrict operations of companies within China and overseas. This widespread supply chain disruption is seen to be behind the Apple revenue warning and the fall of both the DOW and the NASDAQ which is heavily reliant on the Chinese market.

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