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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 3054
Posted: Feb 22, 2010 5:00
Comments: 3054
Forum Topic:
GBP
Discuss GBP
Either way you look at it, these fundamental dynamics are increasingly expressed in the recent decline of EURGBP. Tuesdays release of unexpectedly high UK CPI kept GBP bulls happy and Wednesdays BoE minutes should once again likely show the same number of hawkish dissenters, paving the way for an April rate hike. ON THE EURO SIDE of the coin, the vote on Portugals austerity package is also due on Wednesday. The main opposition party (centre right) will not back the measures, which could lead to the resignation of prime minister Jos Scrates. This could be a problem for the EU leaders meeting on Thursday to finalize the terms of the EFSF and the ESM.
Could the euro ignore the downfall of the Portuguese govt and remain boosted by interest rate hopes? And if playing EURUSD shorts is unwise, then my bearish EURGBP call remains intact (after failing the all important 0.8770 and the 100-week MA) and now is at 100 pips lower). The Feb 18 trendline is under assault and will need a daily close below 0.8635-40 to pave the way for 0.8590s.
Ashraf
Ashraf
28-month highs in UK CPI at 4.2% reinforces expectations of a 0.25% rate hike by the BoE next month, lifting cable to $1.64 to break past the 2007 trendline resistance.
Wednesdays minutes of this months BoE meeting could further fuel the currency towards 1.6450s if they continue to show the 3 hawkish dissenters voting in favour of a rate hike in base rates (Sentence, Weale and Dale). EURGBP shied away from its 0.8770 trendline resistance (see HotCharthttp://bit.ly/ gikAn3 ), making the barrier valid. Dallas Fed president Fisher reiterated his stance against prolonging QE2 beyond June, but the next FOMC meeting wont be until April 27. In order for USD to obtain a boost from such hawkishness into the April meeting, more FOMC members (such as Plosser) have to come forward and give markets a reason to expect actual dissenting votes, rather than voicing opinions regarding beyond June. USDCAD tests 0.78 after disappointing retail sales (-0.3% from -0.2%). Any deterioration in stocks could further support the pair towards 0.9850. More analysis on equity indices to follow next .
Ashraf
Based on your last post on eurgbp and IMT a close above 0.87 may lead to .8880. Does that mean that bearish move will be invalidated which per your hot chart is 0.8800 trendline resistance?
Kam
Ashraf