Stronger UK growth revives downside risks for EUR/GBP – ING

FXStreet Insights Team FXStreet

Better-than-expected UK GDP and industrial production data have lifted confidence in sterling, exposing key support in EUR/GBP to a potential downside break, ING's FX analyst Chris Turner notes.

EUR/GBP vulnerable as markets reassess BoE rate-cut timing

"The UK delivered a positive set of data this morning, including a higher-than-expected monthly GDP figure for November and stronger than expected industrial production figures. A little earlier, we also had some positive news on the housing market, where estate agents are becoming a little more optimistic about sales."

"This is all happening at a time when asset managers are still running some reasonably large underweight positions in sterling. We think the sterling correction we have seen since November probably has a little further to run, especially with the risk of an upside surprise in December UK CPI released next week."

"Given the positioning, we think EUR/GBP support at 0.8645/55 looks vulnerable and the risks are building towards a breakdown to 0.8600 next week. Down there should be a good opportunity to hedge against sterling weakness in March, when we expect the Bank of England to deliver its next cut. For reference, money markets currently price the next cut in April and then again by December. We are looking at March and June for cuts."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold: Upside remains capped by $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains around the $4,370 region per troy ounce on Friday. The yellow metal’s advance finds traction in declining crude oil prices, and manages to offset the continuation of the move higher in the US Dollar and rising US Treasury yields across the curve.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.