3 Charts For GBP Traders

In a phase when unwinding of carry trades and risk-repositioning dominate FX markets, beware from excessive pergence from the evidence. U.S. data continue to deliver its share of mixed showing, but the recent upside surprise from the UK (CPI, retail sales, PMIs and industrial production) cannot be ignored.

Their impact is highlighted in the charts below, where the UK surprise index narrows the gap with its U.S. counterpart. Recent GBP losses have partly been triggered by safe-haven flows chasing U.S. treasuries and gold, dragging down American yields across the board. The result has been further improvement in UK-U.S. yield gap, which in the long run provides support for GBP/USD. Looking at GBP from a multi-currency perspective, the Bank of England's trade-weighted index shows GBP remaining supported along a crucial technical foundation. Look out for 1.3060 as the immediate upside target on cable.

GBP Vs. The World

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