Pound drops on weak GDP data

Thursday 15 February 2024

USD sellers have returned amid softer US bond yields with USDJPY lower to test 150.00 from 150.50 with weak Japanese GDP data meaning the economy has fallen into recession and jury remains out with BOJ tightening still on the table but weak data and falling inflation says differently atm. This morning's UK GDP came in weaker than expected too and means the economy also fell into recession and has seen the Pound in retreat again. Weak jobs data out of Australia also sent a signal that all is not well in the global economy.

Today's data focus now turns to the US with Retail Sales, weekly jobless claims and NY Empire State and Philly manufacturing surveys. The Ukraine/Russia war and Middle East Israel/Hamas/Houthi/Hezbollah/Red Sea tensions are all still casting their own shadow.

Equities remain underpinned overall still and on the rise again as European trading gets underway. WTI has fallen back to test $75.75 after capping at $76.40 as fears return on global economy but dip demand still on supply concerns. Gold has found some dip demand on fragile risk tones amid the USD supply but capping at $1996 so far.

GBPUSD: Capping into 1.2575 but finding support between 1.2530-40 yesterday and this morning in the retreat post UK GDP. I remain poised for further sells when momentum fades as we continue to range. EURGBP: Basing now at 0.8535 having broken back above on the soggy UK GDP data to post 0.8656 as the BOE/ECB debates continues. GBPJPY: Holding 188.30 this morning after capping into 189.25 as core pair supply returns.

EURUSD: Holding 1.0700 then 1.0725 amid the USD supply but capping at 1.0740. Keeping some core shorts and I remain a rally seller. USDJPY: 150.00 holding so far after capping at 150.60 then 150.30. I remain a rally seller as preferred side overall given that the BOJ still don't want this racing away too far but dip demand still notable for the moment as Ive been warning.

For more detailed analysis across a larger number of FX pairs including market order flows and options expiries email mike@mspfx.co.uk

Interbank rates: 07.52 GMT

GBPUSD    1.2544

EURUSD    1.0732

EURGBP    0.8555

GBPEUR    1.1687

USDJPY    150.16

GBPJPY    188.35

GBPCAD    1.6954

GBPCHF    1.1082

GBPZAR    23.8432

GBPHKD    9.7686

USDCHF    0.8838

EURCHF    0.9485

EURHKD    8.3585

AUDUSD    0.6495

NZDUSD    0.6087

USDCAD    1.3542