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FOREX: GBP Selloff Deepens, Weak Retail Sales Weighs on AUD

FOREX
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  • Sterling weakness remains the focus for G10 currency markets on Thursday, with early moves prompting GBPUSD to print the lowest level since November 2023 at 1.2239. Moves have stabilised since, however, GBP remains weaker across the board. The likes of GBPJPY and EURGBP are seeing similar size adjustments as fiscal worries continue to permeate.
  • EURGBP has also extended its recovery, printing a two-month high above 0.8400. Recall on Wednesday, we had a firm break above 50-day EMA resistance, which intersected at 0.8311. Today’s continued strength undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. This opens 0.8424 initially, a Fibonacci retracement, and 0.8448, the Oct 31 high and reversal trigger.
  • AUDUSD is trading back below 0.6200, and has printed fresh cycle lows of 0.6172. We had retail sales slightly below expectations (+0.80%, versus +1.0% forecast), while the trade surplus was higher than forecast. Market pricing for an RBA cut at the Feb meeting is just over 70%, supported after yesterday's slower core CPI print and retail sales today.
  • The USD index is close to unchanged, but has been consolidating above 109.00 amid the US federal holiday. All attention for the greenback will be on tomorrow’s US employment report, however we do have the Fed’s Harker, Collins, Barkin, Schmid and Bowman due to speak today.
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  • Sterling weakness remains the focus for G10 currency markets on Thursday, with early moves prompting GBPUSD to print the lowest level since November 2023 at 1.2239. Moves have stabilised since, however, GBP remains weaker across the board. The likes of GBPJPY and EURGBP are seeing similar size adjustments as fiscal worries continue to permeate.
  • EURGBP has also extended its recovery, printing a two-month high above 0.8400. Recall on Wednesday, we had a firm break above 50-day EMA resistance, which intersected at 0.8311. Today’s continued strength undermines the recent bearish theme and suggests scope for a stronger short-term recovery. Note too that 0.8376, the Nov 19 high and a key resistance, has also been cleared. This opens 0.8424 initially, a Fibonacci retracement, and 0.8448, the Oct 31 high and reversal trigger.
  • AUDUSD is trading back below 0.6200, and has printed fresh cycle lows of 0.6172. We had retail sales slightly below expectations (+0.80%, versus +1.0% forecast), while the trade surplus was higher than forecast. Market pricing for an RBA cut at the Feb meeting is just over 70%, supported after yesterday's slower core CPI print and retail sales today.
  • The USD index is close to unchanged, but has been consolidating above 109.00 amid the US federal holiday. All attention for the greenback will be on tomorrow’s US employment report, however we do have the Fed’s Harker, Collins, Barkin, Schmid and Bowman due to speak today.