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GBP Still Vulnerable To Further Declines And EUR Won’t

GBP/USD resumed its falls on Carney’s speech but there may be more to come, with  sterling not falling alone:

Here is their view, courtesy of eFXnews:

Despite the sharp fall in GBP so far, we still see it as vulnerable to further declines. The downgrade of the UK’s AAA rating to AA (negative) by S&P has added to the negative tone. Markets had overlooked the UK’s growing current account deficit (5.2% of GDP in 2015) previously, but this alongside the uncertainty over its future trade relations and the possibility of rate cuts from the BoE, means it is still too soon to call a bottom for sterling.  We have downgraded our GBP/USD forecast as a result, seeing it heading to a lower 1.20-1.25 range over H2 and into next year.

Pounded pound July 1 2016

The EUR will not be immune to GBP weakness. In addition, the single currency would be sensitive to any voices calling for referenda on EU membership by other countries looking to follow the UK’s footsteps.  We now see the potential for EUR/USD to move to 1.05 or lower, and have downgraded our forecasts as a result.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.