Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD)

The British Pound (GBP) Indicated Increasing Bearish Sentiment

Summary:

  • Euro fundamentals appear to be unchanged.
  • Positive US economic data.
  • Poor U.K economic data.

Markets Focused of Fed officials - EUR/USD

The market is reflecting bearish signals for this currency pair. Markets focused on a variety of Fed officials as they remain unanimous in the direction of future rate hikes but divided on the terminal rate because the fundamentals of the euro appear to be unaltered for the time being. Isabel Schnabel, a member of the ECB's board, was also questioned by Reuters yesterday. In the interview, she expressed concern over the continued threats to the forecast for long-term inflation and the euro's depreciation. The ECB typically doesn't comment on currency exchange rates, but there are times when a broad trend of appreciation or depreciation can influence monetary policy goals.

Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD) - 1 EUR/USD Price Chart

Poor economic news putting pressure on GBP - EUR/GBP

The market is reflecting bullish signals for this currency pair. After a run of dismal economic news, the British pound is in trouble: growth is lower, the labor market is slowing down, and inflation is still raging. Rates of GBP/USD have reversed their recent upward trend, while rates of GBP/JPY are sliding below multi-month trendline support and rates of EUR/GBP are rising from multi-month trendline support. Retail trader stance has recently changed, indicating a bullish bias for the EUR/GBP and GBP/JPY rates and a bearish bias for the GBP/USD rates.

Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD) - 2 EUR/GBP Price Chart

Positive economic data supporting USD - GBP/USD

The market is reflecting bearish signals for this currency pair. Prior to the weekend, the Pound to Dollar exchange rate retreated under the 1.20 handle and was close to its yearly lows after positive U.S. economic data and hawkish remarks from Federal Reserve (Fed) officials were followed by a Dollar rally that sent Sterling and a number of other currencies into freefall. While the U.S. dollar got the better of the Pound late on Thursday and had left it trading as an underperformer by Friday even after July's UK retail sales figures came in stronger than expected by the market, Sterling had better resisted the clutches of a strengthening Dollar throughout much of the week, resulting in a resilient performance against other currencies.

Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD) - 3 EUR/USD Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

The British Pound (GBP) Indicated Increasing Bearish Sentiment

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.