The indications from the Queen’s speech that a bill on an EU referendum will be rushed through parliament, at the same time as UK Prime Minister David Cameron begins his negotiations with EU leaders, has also provided the bears with additional encouragement to drag the pair lower.
The recent close below 1.55 was a critical blow for the Pound/Dollar bulls, and the bears have continued to exploit each opportunity to increase selling pressure with the pair still looking technically vulnerable to further declines. The indications from the Queen’s speech that a bill on an EU referendum will be rushed through parliament, at the same time as UK Prime Minister David Cameron begins his negotiations with EU leaders, has also provided the bears with additional encouragement to drag the pair lower. In general though, the UK economic data outflow has been really thin this week, meaning that the Dollar has provided direction for the Pound. With the Dollar enjoying a fresh round of bullish momentum, this has further inspired the Pound/Dollar to slide down the charts.
Why do I think the Pound/Dollar is still vulnerable to further declines? If the upcoming preliminary UK GDP reading shows that economic momentum is slowing down and this pushes back BoE interest rate expectations, then the Pound/Dollar will continue drifting lower until at least 1.52.
The Euro also continued to decline throughout trading, although this pressure came to a pause when reports emerged from Greece that a deal with its creditors is close to being finalised. There are going to be concerns over whether these encouraging reports will be contradicted later on, but the positive news would be that the risk of a Greece default next week would be avoided if a deal is struck. I just hope that if a deal is finalized that this time it is a real agreement to conclude the discussions with creditors, and not just another extension for further negotiations to continue with an extended deadline.
Why do I think the Pound/Dollar is still vulnerable to further declines? If the upcoming preliminary UK GDP reading shows that economic momentum is slowing down and this pushes back BoE interest rate expectations, then the Pound/Dollar will continue drifting lower until at least 1.52.
The Euro also continued to decline throughout trading, although this pressure came to a pause when reports emerged from Greece that a deal with its creditors is close to being finalised. There are going to be concerns over whether these encouraging reports will be contradicted later on, but the positive news would be that the risk of a Greece default next week would be avoided if a deal is struck. I just hope that if a deal is finalized that this time it is a real agreement to conclude the discussions with creditors, and not just another extension for further negotiations to continue with an extended deadline.
No comments:
Post a Comment