Alpesh Patel's NEWSLETTERPRO - Pound hits yearly highs against the Euro, appreciates versus the Dollar on increased investors’ optimism

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Pound hits yearly highs against the Euro, appreciates versus the Dollar on increased investors’ optimism

© Alpesh Patel

MORNING BRIEF

The British Pound was the main focus of yesterday’s session with the currency hiking higher on the back of increased investor optimism regarding today’s MPC minutes’ release. The Pound hit a yearly high against the Euro and recorded a three-days in a row climb versus the Dollar. The UK employment data and the MPC minutes’ release are scheduled for today and investors seem confident that the data will print strong and policymakers will regard the slowdown in growth during the end of last year as only a slight pull back. The unemployment rate is falling near the BoE’s target and although the 7% level is regarded by policymakers as a target and not a trigger for a change in the monetary policy analysts are citing that this threshold could be reached within the current year instead of the initially targeted Q3 of 2015. On the Euro’s front, the Single currency remained unchanged against the Dollar yesterday as the ZEW survey figures came out mixed. The ZEW Survey is a measure of investors’ confidence regarding current and future conditions in Germany and the Euro Area and according to the report investors are content with the current situation in Germany but have concerns regarding the country’s outlook. The report also measured that investors remain optimistic regarding the Euro-zone’s outlook which means that the general feeling is that although several countries are facing individual fiscal problems the Euro area as a whole seems to be progressing well. The day ahead of us holds important releases coming mainly from the UK so we expect the Pound to be on the move and any developments on the Euro to be mostly caused by flows in the EUR/GBP cross.

British Employment data and MPC minutes on the docket

The Economic Calendar today holds important releases from the UK as the British Employment data and the MPC minutes are scheduled for release early in the morning. Expectations are that the unemployment level will drop even closer to the 7% BoE target and Weekly Earnings are also expected to improve. Although we’ve seen signs of several sectors slowing down at the end of last year British companies continued to hire employees at a steady pace last month therefore we have reasons to believe that the figures today will print strong. Regarding the MPC minutes’ release the key question here is whether policymakers will focus on the signs of slowdown at the end of the year or on the improvements made in the unemployment rate. If the committee’s members regard the slowdown in several sectors as a sign of only temporary weakness and reiterate their satisfaction for the falling unemployment rate then the Pound will continue higher. Any concerns however regarding the drop in the PMIs will pressure the Pound and probably drive it lower again.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

9.30

GBP

ILO Unemployment Rate

Medium

7.3%

7.4%

9.30

GBP

Weekly Earnings ex Bonus

Medium

1.0%

0.8%

9.30

GBP

Bank of England Minutes

Medium

 

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TECHNICAL ANALYSIS & LEVELS

 

EUR/USD

The Euro climbed higher within the day yesterday versus the Dollar and our stops at the 1.3570 mark were hit closing us out with a small profit for the remaining 50% of our previous trade. At the same time our long entry was triggered and it seems that the Euro might be looking to move higher today having printed a higher low at the 1.3515 area. So we remain engaged in our long trade but we need to adjust our targets and stops taking into account the recent price action. So our entry was hit at the 1.3570 level, our targets are now set at the 1.3600 and 1.3650 marks and our stop needs to be placed at the 1.3505 mark.

GBP/USD

The Pound continued higher yesterday and our second target at the 1.6480 mark was finally hit to conclude a beautifully executed trade. Now we will stand aside for the day as we have just concluded a trade and no tradable patterns are present, we will monitor how the Pound reacts to the unemployment report and the MPC minutes’ release and plan ahead accordingly.

FTSE 100

The FTSE 100 was rather volatile yesterday as it popped above the recent highs to trigger our long entry and reached our first target before pulling back right away to close the remaining 50% at the breakeven price. For the time being we will stand on the sidelines and monitor the index’s behavior for today as we have no suggestions for you at this time.

Gold

Gold continued lower yesterday as it seems that the current uptrend is threatening to come to a halt. At this point Gold is hovering around the $1,240 area having test the bottom end of the trend’s regression channel and we need to confirm that this low won’t be broken prior to thinking of going long again. If Gold manages to hold above the $1,240 level then we could see another swing higher, otherwise if it breaks below the $1,235 support then the short-term outlook changes to negative.

 

The above charts have been created using FXCM’s Trading Station platform.

STOCK MARKET FOCUS

 

[Restricted Content] PLC.

The Alpesh Patel Bullish Momentum filter has indicated [Restricted Content] PLC. as our stock of the day. 
Company Information: [Restricted Content]


Created using Sharescope Pro

[Restricted Content] PLC. has been rated an 7 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is low suggesting that the stock might be  underpriced, the ratio of the price earnings growth is also low and Earnings are up year on year supporting the growth potential. From a technical standpoint, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline but we suggest that you wait for the stock to close above recent highs before buying it. The suggested holding period for a stock of this type is 1-3 months.

Important Information

The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.

 

This is the free, time-delayed version of NewsletterPro, a subscription-based product.
If you would like to receive it before 7:30am, please subscribe by clicking here.

 

 

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