London Forex Report: GBP Prints Lowest Level In Six Years

London Forex Report: GBP Prints Lowest Level In Six Years

London Forex Report: GBP prints lowest level in six years as London Mayor Boris Johnson supports a UK Brexit from the EU ahead of the UK referendum slated for June 23rd. Yesterday’s data showed global manufacturing remained sluggish, reaffirming still soft global demand amid continued moderate recovery in the world economy. Markit manufacturing PMI indices out of the US and EU softened in February, while a similar gauge from Nikkei showed manufacturing activities moderated more than expected in Japan. Meanwhile, CBI showed British manufacturing deteriorated further in February. USD strengthened USD Index jumped 0.8% to 97.37 on the back of strong build-up in risk aversion amid sell-off in European majors, led by GBP and EUR.

EURUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: EUR dropped near to 1.1000 for the first time in nearly three weeks due to the uncertainty over Brexit issues. Euro Zone February composite PMI was 52.7, worse than 53.3 as expected. This has showed that the business growth in Euro Zone is at its weakest levels in over a year. Official data showed the inflation in Euro Zone was just 0.4 percent in January, much lower than the ECB’s two percent target, offering a reason for ECB to loosen the monetary policy in coming March

Technical: While prior pivotal support at 1.1050/30 acts as intraday resistance bears target prior range support at 1.08. Only a close over 1.1150 eases immediate downside pressure

Interbank Flows: Bids 1.10 stops below. Offers 1.1150 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral

GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: GBP fell near two percent yesterday as London Mayor Boris Johnson expressed his advocacy toward Brexit issue, suffering its biggest one-day drop in almost six years. GBPUSD dropped to as low as 1.4057, a low not seen since March 2009. Although Euro slipped in tandem with Sterling, EURGBP surged to an intraday high of 0.7843, its highest since January 2015.

Technical: Retest of 1.4040 lows as anticipated, while 1.4240/60 acts as resistance expect a continued grind lower for a test of the next major monthly downside objective at 1.37. Only a close over 1.4450 eases immediate downside pressure.

Interbank Flows: Bids 1.4040 stops below. Offers 1.4240 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short

USDJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: Despite the markets’ risk sentiment ticking up,as oil prices and stock prices have rebounded, JPY remained firm on Monday. USDJPY was traded below 113.50 handle, aided by the under performance of US Manufacturing PMI. Markets shift their focus to US consumer confidence due this afternoon.

Technical: The failure at 112 opens retest of 111 bids. Only a close over 113.40 eases immediate downside pressure.

Interbank Flows: Bids 111.50 offers below. Offers 113.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: Performance of the Japanese manufacturing sector remains lack luster. The gauge of factory conditions fell from 52.3 in Jan to 50.2 in Feb, the lowest since June 2015. The fall in total new work intakes was attributable to the sharpest decline in exports in three years.

Technical: Initial test of bids sub 124 attracts profit takers, while 125 offers intraday resistance expect a continued grind lower to print fresh lows at 123 en route to a weekly downside objective at 118/117

Interbank Flows: Bids 125 stops below. Offers 126.50 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short

AUDUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: AUD continued its rally overnight bolstered by gains across global equities and commodity prices. Risk on sentiment has lifted the currency pair through 0.72 levels to touch intra-day highs at 0.7246. Recent upbeat economic data, together with relatively stable economic outlook, is expected to allow the RBA to maintain its current monetary policy stance, thus adding support to the higher yielding AUD.

Technical: Expected a retest of offers above .7240 en-route to .7310 while .7150 supports. Another failure at .7050 would suggest further weakness to retest year to date lows at .6820’s

Interbank Flows: Bids .7150 stops below. Offers .7300 stops above.
Retail Sentiment: Bearish
Trading Take-away: Long

USDCAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: CAD rose against USD as crude oil prices rallied. Oil prices rose after the International Energy Agency said it expected US shale production to fall this year and next, potentially reducing the surplus in supplies. US crude prices settled up 6.2 percent at $31.43 a barrel, while Brent added 5.1 percent to $34.68.

Technical: While USDCAD trades sub 1.3850 downside pressure remains the driver with bears fully focused on a retest of 1.3630 bids ahead of 1.3530. A close over 1.3850 suggests a retest of 1.40 offers in broader range trade.

Interbank Flows: Bids 1.3630 stops below. Offers 1.3850 stops above
Retail Sentiment: Bullish
Trading Take-away: Neutral

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