Back
5 Jan 2015
Soft EUR dragging the Pound lower – Investec
FXStreet (Barcelona) - The Investec Team explain that Euro weakness against the USD is also dragging the Pound lower as 2015 trade begins, with EUR/USD falling below 1.20 levels and GBP/USD seeing below 1.5200 levels before retracing its losses.
Key Quotes
“Last week ECB President Mario Draghi gave his clearest signal yet in the German press that the European Central Bank is gearing up for sovereign bond buying (Quantitative Easing) as early as this month as the threat of deflation remains (particularly from the continued fall in oil prices).”
“Negative deposit rates continue to hurt the single currency and IMM exchange traded data that can reflect the trading community continue to add to short Euro positions.”
“Overnight the Euro triggered stop loss orders under 1.2000 against the US Dollar in what continues to be a favourite trade for many in the market.”
“The Euro also struggled following a report in German magazine der Spiegel that the German government believes a Greek exit to be unavoidable if the left wing Syriza party wins the impending General Election. The report also states that the Euro area could cope with such an outturn given that reforms in the zone over the past couple of years mean that Greece is now much less systemic.”
“The Pound has had an equally ugly time against the US Dollar. The last revision to UK GDP readings saw small adjustments down to many previous quarters’ readings that saw UK annual GDP revised down around 0.5% across the year while US GDP enjoyed another revision higher thanks to spending from initiatives such as Obamacare.”
“From trading 1.5600 on Thursday we saw a large move lower on Friday as 2015 trading positions were initiated and UK Manufacturing PMI disappointed, breaking under 1.5400 late Friday.”
Key Quotes
“Last week ECB President Mario Draghi gave his clearest signal yet in the German press that the European Central Bank is gearing up for sovereign bond buying (Quantitative Easing) as early as this month as the threat of deflation remains (particularly from the continued fall in oil prices).”
“Negative deposit rates continue to hurt the single currency and IMM exchange traded data that can reflect the trading community continue to add to short Euro positions.”
“Overnight the Euro triggered stop loss orders under 1.2000 against the US Dollar in what continues to be a favourite trade for many in the market.”
“The Euro also struggled following a report in German magazine der Spiegel that the German government believes a Greek exit to be unavoidable if the left wing Syriza party wins the impending General Election. The report also states that the Euro area could cope with such an outturn given that reforms in the zone over the past couple of years mean that Greece is now much less systemic.”
“The Pound has had an equally ugly time against the US Dollar. The last revision to UK GDP readings saw small adjustments down to many previous quarters’ readings that saw UK annual GDP revised down around 0.5% across the year while US GDP enjoyed another revision higher thanks to spending from initiatives such as Obamacare.”
“From trading 1.5600 on Thursday we saw a large move lower on Friday as 2015 trading positions were initiated and UK Manufacturing PMI disappointed, breaking under 1.5400 late Friday.”