Foreign exchange traders are obsessed with selling the British pound and it seems like there is nothing that can stop the currency’s slide.
Producer prices were mostly stronger than expected, which should have helped the pound recover some of its losses, but further slowing in the growth of house prices prevented the currency from rallying. Instead, the British pound gave back all of its gains against the US dollar and fell to a new low against the Euro, Swiss Franc and Japanese Yen. Earnings season is upon us and according to a study from Ernst & Young LLP, UK companies issued the most profit warnings in six years. Fundamentals continue to point to further losses in the British pound but there are reasons why the currency may bounce. According to our analysis of the Commitment of Traders report, positioning in the pound is at an extreme and the short term Elliot Wave count suggests that relief may be in sight for the currency pair.