#Daily_market_report British Pound Stronger as BOE Governor Carney Talks Up Rate Hike Bets - EUR/GBP turned around for testing 0.80 support - EUR/USD is caged in 10-pip range around 1.34 The British Pound outperformed to start the trading week, rising as much as 0.3 percent on average against its leading counterparts. The move followed supportive comments from Bank of England Governor Mark Carney made in an interview with the Sunday Times published over the weekend. Carney said the economy is “much more than halfway” to full economic recovery and argued interest rates may have to rise before wages, seemingly contradicting rhetoric released in the quarterly Inflation Report just last week. GBP/USD gapped higher at the open on Carney interview, and is still trading around 1.6720 area at the moment. The pound practically ignored the Friday’s stronger than expected GDP data, as the market is mostly focused on the inflation indicators at the moment. However, it did react to the soothing words of Carney in newspaper interview where he hinted inflation may be not the most important for rates expectations. We will still watch the UK CPI and the Retail Sales reports, however, in current circumstances the latter could be more important when the former. The pound was heavily beaten recently, thus, the bottom has probably been found already, and the corrective rebounds are not ruled out from now on provided fundamentals help. The next target to the upside may lie at 1.6751. EUR/GBP gapped lower at the open at 0.8007, and is now working on 0.80 to break below. The cross may have come to the turning point this week, as the corrective sentiment on the euro is fading away, and the pound, on the opposite, may have a chance to recover after it came over the worst it could. Besides, the market may focus on the broader picture, and the picture says that while the EMU is on the brink of recession, the UK showed the highest GDP level from the end of 2007 in the second quarter. The empty economic calendar may be a problem for today, however, even geopolitical risks may play in favor of the British currency. If 0.80 breakout confirmed, the next target may lie at 0.7993 followed by 0.7982. EUR/USD opened the day at 1.3395, touched 1.3387 low, rebounded to 1.3398, but gravitation brought it back to 1.3390 area at the moment. The euro is oversold, and this is confirmed by CFTC data, and by its recent behavior. However, there are very few reasons to buy the currency in current situation taking into consideration the economic indicators weakness, and still escalating Russian-Ukrainian conflict having negative effect on the Germany trades. The only supportive factor for now is probably the profit fixing that may be triggered in cases when speculators think the downside potential for the pair is limited. As soon as the corrective moods are over the pair may be sold out again, and in this case the initial target to the downside may lie at 1.3369, followed by 1.3338. Have a good day! Infinity International, Ltd
Posted on: Mon, 18 Aug 2014 07:50:03 +0000
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