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11 Mar 2014
Flash: GBP/USD potential downside to 1.6260 - Investec
FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, suggested a breakdown of 1.6600 could allow GBP/USD for a revisit of 1.6260.
Key Quotes
"With little in the way of news flow yesterday, we were set for a quiet introduction to the week. However reported M+A flows and stale long market positioning hit Sterling and saw GBPEUR break below 1.2000 whilst GBPUSD also weakened significantly, slipping a cent from 1.6740 at the open down to our 1.6600/20 support level."
"A break and close through here is likely needed for a move towards the key 1.6260 support. If that wasn’t enough to dampen Sterling’s spirits early on, Charles Bean, the BoE deputy governor for monetary policy, said GBP had risen 10% against the currencies of the UK's main trading partners in the past year and any further increase would hurt British exports."
"Whilst acknowledging the improved economic climate in the UK he cautioned that the trade deficit still had a long way to narrow, which would require a rebalancing of the economy away from domestic spending and towards overseas trade. Then to complete a poor 24 hours for sterling, this morning the British Retail Consortium reported a sharper than expected slowdown in consumer spending in February after heavy flooding and rainy weather dampened sentiment, following a bumper rise in January."
"The BRC said total retail sales grew by just 0.7% on the year in February, down from January's 5.4% surge. Breaking down the components we see that lower grocery sales were a drag on the overall figure, which serves as a reminder that challenges remain for both retailers and consumers coming into 2014."
Key Quotes
"With little in the way of news flow yesterday, we were set for a quiet introduction to the week. However reported M+A flows and stale long market positioning hit Sterling and saw GBPEUR break below 1.2000 whilst GBPUSD also weakened significantly, slipping a cent from 1.6740 at the open down to our 1.6600/20 support level."
"A break and close through here is likely needed for a move towards the key 1.6260 support. If that wasn’t enough to dampen Sterling’s spirits early on, Charles Bean, the BoE deputy governor for monetary policy, said GBP had risen 10% against the currencies of the UK's main trading partners in the past year and any further increase would hurt British exports."
"Whilst acknowledging the improved economic climate in the UK he cautioned that the trade deficit still had a long way to narrow, which would require a rebalancing of the economy away from domestic spending and towards overseas trade. Then to complete a poor 24 hours for sterling, this morning the British Retail Consortium reported a sharper than expected slowdown in consumer spending in February after heavy flooding and rainy weather dampened sentiment, following a bumper rise in January."
"The BRC said total retail sales grew by just 0.7% on the year in February, down from January's 5.4% surge. Breaking down the components we see that lower grocery sales were a drag on the overall figure, which serves as a reminder that challenges remain for both retailers and consumers coming into 2014."