British Pound (GBP) Outlook - GBP/USD Setting Sail Into Potential Cross-Winds
2021-04-30 11:00:00
Nick Cawley,
Strategist
British Pound (GBP) Price Outlook
Bank Holiday shortened week may see sterling volatility rise.
BoE and local elections will drive the domestic agenda.
GBP/USD has remained in a fairly narrow trading range over the last two weeks and this may well change next week as various monetary and political risks collide. A Bank Holiday shortened week ahead contains the latest Bank of England (BoE) monetary policy decision and economic updates on Thursday, which may well see the central bank begin to tighten policy by reducing the rate at which it purchases UK bonds over the rest of the year. Thursday also sees the UK local elections and special attention needs to be paid to the Scottish elections where an SNP majority may see IndyRef2 back on the agenda. At the end of the week, the latest US jobs data is likely to confirm the ongoing strength of the US economy, like
April saw gold, bonds, and stocks (The Dow) all rise around 2% while the dollar fell around 2% against its fiat peers.
Source: Bloomberg
All major US equity indices ended April higher with Nasdaq 100 leading the way and Small Caps lagging.
Source: Bloomberg
And while the 5%-ish gain for the month in S&P is notable, during 18 sessions this month through trading on Thursday, 95% or more of the index s members traded above their 200-day moving average.
It looks like American colleges won t be alone in making vaccination mandatory for any students who want to return to campus next semester. Despite the White House s determination that vaccination shouldn t be mandatory by law, more than 60% of American companies are reportedly leaning toward requiring proof of vaccination from their employees.
4/16/2021 4:26:40 PM GMT
USD/JPY falters as Treasury yields slide, drops 1% on the week.
10-year yield sheds 15 points to Thursday, recovers 5 on Friday.
Excellent US Retail Sales, Jobless Claims provide no immediate dollar support.
Consolidation likely in USD/JPY as markets await initial US second quarter data.
FXStreet Forecast Poll predicts extending USD/JPY weakness.
In a classic case of following the bouncing yields, the USD/JPY sank for the first four days as US Treasury yields saw their steepest losses in a month then rebounded as the credit market reversed on Friday.
From Monday’s close at 1.675% the return on the benchmark 10-year note dropped 15 basis points to 1.530% on Thursday and the USD/JPY descended from 109.66 to 108.78. Friday’s reversal in yield, up six points to 1.59% stabilized the USD/JPY above 108.80 after Thursday’s intra-day dip to 108.61.