GBPUSD Turns to Downside After PM May’s Comments Over Weekend

Cable started the year on a rally that carried it to reach 1.2408 last week; however, comments from PM May over the weekend sent the Pound back on a downward course. PM May stated that the UK would not be seeking to remain within the single market and would attempt to negotiate a separate trade deal.

May’s comments added to the pressure Sterling started feeling last Friday, when US Non-Farm Payroll data released at 156k, showed that the US economy was still pushing forward at a strong pace. Certainly data released was considered in line with the Federal Reserve’s expectations, increasing bets that the Fed will hike at a speedier rate going forward.

Tomorrow, Cable may find some relief as the UK will release data for Industrial and Manufacturing Production at 09:30 am. Sharp increases are expected from last month’s data; Industrial Production is expected at 0.6% & Manufacturing at 0.4% on a yearly basis, compared to last month’s data of
-1.1% and -0.4% respectively.

On Friday the Pound will also get another test; US Retail Sales data will be released, considered a gauge of inflation, higher than expected numbers could send Sterling further south. Market consensus is for this month’s data to 0.7%, monthly basis, compared to last month’s reading of 0.1%.

If you think Retail Sales may be released higher than expected then all you need to do is sell Cable with Deal Cancelation protection. This feature allows you to place a trade with a maximum stop loss, which if hit during the first hour, will only cost you the premium paid to buy Deal Cancellation protection.

Deal Cancellation protection gives you the option to close a trade, during 1 hour, losing no more than the premium paid, while allowing you to profit from any positive price movement. The screenshot below shows that to sell £28,000 with a stop loss of €331.93 would cost €18.78 in Deal Cancellation protection.

If the market goes lower from 1.21585 you will be able to close your position for a profit less the cost of the Deal Cancellation protection. Let’s say price goes down to 1.20885, then your profit would be €185.88 - €18.78 = €167.10, while your maximum risk would be €18.78 for 1 hour.