Giles Coghlan LLB, Lth, MA
HYCM
On Tuesday at 7 am UK time, UK labour data is due to be released at a crucial time to see how the UK labour market is doing. After the Bank of England started to send out more mixed signals about the upcoming path of interest rates in the UK, governor Bailey said last week that we are no longer in a phase ‘where it is clear that rates need to rise and we’re now data-driven as policy restrictive’.
Furthermore, we’ve seen market pricing unwind the terminal rate of 6% for the Bank of England and it’s currently down to around 5.6%. On top of this, the latest CFTC report is showing pound longs being reduced, so with the UK labour data out on Tuesday watch for a big miss. If we see a big miss in the data then market participants will further anticipate a slowdown in UK interest rates. This could potentially send the pound lower. Furthermore, notice this strong seasonal pattern in the GBPJPY over the last 15 years. The GBPJPY has fallen on average over 2 1/2% between the 12th of September and the 9th of October. Will, UK labour data send the pound lower on Tuesday?
Major trade risks: The major trade risks here are if the UK labour market remains strong and/or if US yields continue to rise which would weaken the JPY. The GBPJPY outlook also needs JPY strength and that is highly uncertain at the moment due to the path of US rates.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.
Recommended Content
Editors’ Picks
EUR/USD approaches 1.1000 as DXY drops below 103.00
EUR/USD rose to 1.0988, reaching the highest intraday level since August 11. The pair trades near 1.1000, supported by broad-based US Dollar weakness. The DXY dropped below 103.00 to the lowest in three months.
GBP/USD breaks above 1.2650 to the highest level in almost three months
GBP/USD rose further during the American session, breaking above 1.2650. to the strongest level since early September. A weaker US Dollar continues to support the upside in the pair. Lower Treasury yields weigh on the Greenback.
Gold surges to six-month high amid soft USD ahead of Fed speeches
Gold price climbs to a six-month high, more than 0.50% on Tuesday, early in the North American session, as the Greenback remains on the defensive, undermined by falling US Treasury bond yields.
Dogecoin price might recover losses if volume picks up
Dogecoin has noted a massive rise in wallet addresses with a non-zero balance. This increase is typical of rising demand among market participants for DOGE. On-chain metrics paint a bullish outlook for Dogecoin.
Eurozone bank lending continues to weaken as economy adjusts to higher rates
Loans to businesses are now 0.3% lower than in October last year, the first annual decline since July 2015. This confirms that monetary tightening is having a clear effect on the economy. A divide between countries is also opening up.