Market News & Analysis
GBP/USD Rebounds Post BoE
Fiona Cincotta May 7, 2020 3:01 PM
The Pound has managed to hold those gains even after a dark outlook for the UK economy from the central bank. Forecasts of a -14% contraction in GDP, expectations of higher unemployment and a tepid recovery which could drag into next year. Inflation is expected to slip below 1%.
Given such dire projection, more QE is almost a given, its just a matter of time.
Attention will now turn towards Boris Johnson and his exit strategy, which is expected to be announced on Sunday.
US Initial jobless claims
Looking ahead, attention will turn to US initial claims data. Expectations are for a further 3 million Americans to have filed for unemployment insurance in the week of 1st May. This will take the total to 33 million, or 20% of the US labour force in just 7 weeks, as the coronavirus crisis reaches further into the labour market. Whilst this week would represent a 56% decline from the top is still shockingly high, particularly given that several states have lifted lockdown restrictions and that the highest level of initial claims reached during the financial crisis was 665,000.
Whilst the shocks of the earlier releases have passed, these figures will need to be digested on top of yesterday’s 20.2 million private sector job losses and ahead of tomorrows non-farm payroll.
Levels to watch:
GBP/USD rebounded off session lows pierce through US$1.24. The pair remains below 50 sma on 4 hour chart. A move above $1.2450 (50 sma) could see more bulls jump in driving the price to resistance at $1.2486 (high 5th May) prior to $1.2640/50 (high 30th April & 14th April).
Immediate support can be seen at US$1.2310 (today’s low) prior to $1.2247 (low21st April)
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.
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.