GBP/USD: Stearling weakness could extend further – MUFG

Matías Salord FXStreet

Analysts at MUFG Bank point out that the GBP/USD pair approaching 1.3000 reflects lots of good news on political risk and basically largely ignores other aspects. They see downside risks for the pound, particularly from the weakening fundamental backdrop.

Key Quotes:

“We continue to hold our short GBP/USD trade view and our stop of 1.3000 was close to being hit earlier this week GBP buying was fuelled by optimism over the Tory Party being on track to win a parliamentary majority in the upcoming general election on 12th December.”

“There is little evidence of yet of a Labour Party surge in the polls like what took place in 2017. Indeed, a surge to within 5ppts like in 2017 is unlikely this time we believe but where do the risks lie from here? With the Tory Party in some polls ahead by 15-17ppts, the risk is still that the Labour Party make advances over the coming weeks.”

“The Tory manifesto has not yet been released (Sunday possibly), so weekend polls will be clear litmus test of whether the electorate view them favourably. If so, another hit to the pound will follow next week.

“The fundamentals continue to deteriorate as was evident in the PMI Composite Index, which fell to 48.5, the worst print since just after the Brexit referendum in 2016. This new flash report (85% of responses) is flashing GDP contraction and strongly indicating the spreading damage of not just Brexit but global trade uncertainties.”

“The sharp reversal of GBP yesterday and today highlights a lot of good news being priced at levels approaching 1.3000 and we see a greater risk of the Labour Party closing the opinion poll gap than the Tory Party extending the gap further. Combined with a possible escalation in global trade uncertainties due to US-China tensions reemerging and given weak UK fundamentals, GBP weakness could extend further.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD inches lower during the Asian hours on Monday, trading around 1.1870 at the time of writing. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming improving momentum. RSI has cooled from prior overbought readings but stabilizes above 50, suggesting dips could stay limited before buyers reassert control.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold buyers hesitate amid holiday-thinned trading

Gold trades volatile, but within range, as US, China holidays-led thin trading exaggerates moves. The US Dollar extends range play into the US GDP week, with markets pricing at least two Fed rate cuts this year. Technically, Gold tests key support at $5,000; daily RSI still remains bullish.

Top Crypto Losers: Dogecoin, Zcash, Bonk – Meme and Privacy coins under pressure

Meme coins such as Dogecoin and Bonk, alongside the privacy coin Zcash (ZEC), are leading the broader market losses over the last 24 hours. DOGE, ZEC, and BONK ended their three consecutive days of recovery with a sudden decline on Sunday, as crucial resistance levels capped the gains. Technically, the altcoins show downside risk, starting the week under pressure.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.