Market News & Analysis


Top Story

GBP/USD Pound Brushes Of Upbeat Inflation

The pound spiked briefly higher in early trade on Wednesday following upbeat CPI reading, however was unable to hold its gains and has slipped back through $1.30. Whilst UK inflation declined -0.3% mom (vs. -0.4% exp) on an annual basis prices increased a better than expected 1.8%, up from December’s 1.3%. This was the first time that inflation has risen in 6 months


This is still below the BoE 2% target, however the central bank will have no reason to lower interest rates at its next meeting. The upbeat inflation data comes following encouraging signals from the UK labour market, where wages topped pre-financial crisis levels in the three months to December. The British economy also grew by more than analysts had forecast and UK house prices increased by 2.2% vs 1.7% the previous year. The UK economy is starting to show signs of recovery after Brexit uncertainty dragged across the previous year. 

Brexit
Any gains in the pound, however, will continue to be capped or eroded by Brexit trade deal fears. As a reminder, Michel Barnier has rejected UK demands for a Canada style deal. The UK has also rejected any role of the ECJ in the future trading relationship. As the two sides have toughened their stance ahead of the March start date for talks, fears of no trade deal being agreed are rising.

Dollar steady ahead of Fed minutes
The dollar is holding steady versus its major peers in early trade. The greenback has been supported by safe haven flows in recent sessions, as anxieties surrounding the impact coronavirus could have on the global economy increase. 

Apple warned that it may miss its revenue target as coronavirus was affecting both supply and demand of iPhones in China. German ZEW investor confidence survey also highlighted concerns over coronavirus impacting exporters.

Today attention will turn to the release of the minutes from the Federal Reserve monetary policy meeting. Not much happened at the meeting. Federal Reserve Chairman Jerome Powell didn’t say anything new and no action was taken. As a result, investors are not expecting to see any major signals in the minutes. 

Levels to watch
GBPUSD slipped below the key psychological level of $1.30. It trades below its 200 & 100 sma and is just testing its 50 sma around $1.2980 on the 4 hour chart.
Immediate support can be seen at $1.2980 (50 sma) prior to $1.2950 (low 13th Feb) $1.2865 (low 10th Feb). 
Resistance is seen at $1.3050 (18 Feb high &200 sma) before $1.3085 trend line resistance prior to $1.32 (high 13th Feb).


 

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.