Last Updated: 07 April 2014

Updated: The British Pound (GBP) is stable as we move into the second week of April. Selling on global equity markets has seen some relief being enjoyed against the commodity dollars. Meanwhile, we continue to see consolidation vs the Euro and US dollar.

This period of consolidation will inevitably give the sterling bulls hope that the 2014 rally can ultimately reassert itself.

For the latest, see our live coverage section. For the archived material you clicked for, please scroll down.

By Will Peters

Up to date British pound (GBP) exchange rates

£ vs Euro: 1.1701

£ vs Dollar: 1.2696

£ vs Australian Dollar: 1.9543

£ vs Canadian Dollar: 1.7264

£ vs New Zealand Dollar: 2.0903

£ vs Rand: 24.1031

BE AWARE: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

Markets look forward to Bank of England announcement

Investors were probably also looking forward to tomorrow’s Q4 GDP estimate. A reasonably strong figure is expected and investors probably don’t want to go short sterling into the publication of this report. Markets are looking for a reading of 0.7 pct for the last quarter and a year-on-year reading of 2.8 pct.

17:12: Sterling corrects higher

Today has seen a convincing answer by Sterling to suggestions that it is overpriced. Markets ensure the currency took back much of Friday's losses suggesting that the selling pressure may have merely been a 'squeeze.'

Piet Lammens at KBC Markets comments:

"EUR/GBP touched a minor correction top just above 0.83 early in Asia. However, the topside in the euro was capped as the sell‐off on Asian equities slowed. And EUR/GBP was no exception to this rule. EUR/GBP hardly gained any ground on the strong IFO report. This apparently convinced markets that the topside was well protected.

"The euro drifted gradually lower after the IFO report. At the same time, cable reversed part of Friday’s post‐Carney losses, too. M&A related activity might have supported sterling."

16:25: GBP/CAD bulltrend suffers a flesh wound

Shaun Osborne on the bullish trend that is the pound / Canadian dollar exchange rate:

"GBP/CAD suffered a ‘flesh wound’ with last Friday’s heavy sell off. We say heavy price action rather than bearish because the slide left no obvious reversal signals on the short-term charts and we rather look for the firmer GBP/CAD trend to get back on track fairly quickly as a result of still positively aligned trend intensity signals across the medium and longer-term timeframes.

"This should really mean limited counter trend corrections for GBPCAD for the moment. We look for firm support in the 1.8150area (major support at 1.8050 now). We think the underlying trend makes the 1.90/1.92 range reachable."

15:40: Inflationary pressure to grow as half of UK businesses are to hike wages

With the Bank of England increasingly likely to shift focus away from the UK unemployment rate it will be inflation and wage growth that are likely to be increasingly eyed by markets.

So it is with interest that we hear from The Barclays Employers Survey 2014, 57% of businesses are planning to increase wages in the year ahead, with 39% planning to increase them for their entire workforce.

Kevin Wall, Co-Head of Corporate Banking Origination, Barclays, said: "After an extended period of wage freezes, which have been tough for employees, it's good to see that so many employers will be increasing wages in the coming year. This can only have a positive impact on employee morale. However, it will increase inflationary pressure as the year progresses."

Prior to last week's falling unemployment announcement, only 14% of survey respondents thought that unemployment levels would fall sufficiently to trigger an interest rate rise this year.

Almost a third (32%) thought it would be in 2015 and 44% of the largest companies surveyed thought it would be 2016 or later.

Kevin Wall added: "Whilst no one knows when interest rates will rise, businesses should not be complacent. It would be prudent for firms to ensure they have sufficient cash flow to absorb the increase when it comes."

15:15: A stronger UK exchange rate = lower inflation numbers

Mark Carney bad-mouthed the pound on Friday, but it turns out the strong UK currency is set to help make his job of keeping inflation lower a great deal easier. The number crunchers at Bank of America Merrill Lynch have the following gem:

"The exchange rate has appreciated around 3%. Imports account for around 35% of firms’ primary costs, and so assuming that stronger Sterling pushes down UK import prices by 3pps and assuming a 75% pass-through into the CPI price level, that could lower CPI inflation by up to 0.6pps over the next few quarters."

BUT, there is more:

"Oppositely, the unemployment rate in Q4 is set to be around 0.5pps weaker than the 7.6% the BoE expected in November. All else equal, an unexpected fall in unemployment of that magnitude might be expected to raise CPI inflation by around 0.7pps over the medium term."

Bank of America are forecasting an interest rate hike in Feb 2015: The BoE are "highly likely to continue to try and moderate financial markets’, consumers’ and businesses’ interest rate expectations though, and indeed we continue to think that interest rate rises are still some way off maintaining our February 2015 forecast."

14:54: GBP/EUR climb to 1.3 will be slow

Analyst at AFEX reckon the GBP/EUR is likely to be well supported, with any visits below the key 1.2 level likely to be short lived:

"From a shorter term perspective GBP/EUR may experience further erosion but any set-back beneath the psychological 1.2000 level should prove relatively short-lived and unless the distant 1.1800/10 zone gives way studies suggest no major/structural damage will be done.

"With regular sell-offs remaining a feature here an anticipated return to 1.3000 will obviously take time to realise and for now at least the angle of ascent remains somewhat shallow. Dips are proving corrective/untenable with a breach of the distant 1.1800 level needed to suggest an intermediate top already seen but as with GBP/USD risk exists for further downside retracement this week although such losses should prove untenable.

"GBP/USD is also still in a broad recovery sequence and, while the presence of historical resistance at 1.7000 effectively restricts upside potential, in the absence a more broad-based U.S. Dollar bearish environment good demand at 1.6300 or 1.6150 limits downside risk as well."

14:42: Could we see a sell entry later today?

"The GBP/USD has bounced back to start this week’s trade after collapsing on Friday in the wake of some relatively dovish comments by BOE Governor Carney. The pair failed to hold above the key 1.6600 level last week, and further bounces toward that area may initially be met with selling pressure once again. We maintain a neutral bias for now, though a clear bearish candlestick pattern could produce a possible sell entry later today." - Matt Weller at GFT.

13:39: GBP content to ignore BoE Warnings

Camilla Sutton at Scotiabank:

"GBP is up 0.5%, content to ignore repeated BoE warnings that there is no imminent risk of an interest rate hike even as unemployment trends move rapidly towards the 7% threshold. There was no domestic data this week, but Q4 GDP is expected to come in at 0.7%q/q and 2.8%y/y in tomorrow’s session."

"The MACD has shifted into buy territory but is lacking conviction. Support lies at the 50‐day MA of 1.6384; while resistance lies at the recent high of 1.6668."

13:01: Outlook still favours the GBP over the euro

A couple of views on the outlook for the GBP vs EUR.

MIG Bank:

"EUR/GBP continues to improve after Thursday's bullish engulfing pattern. The hourly resistance at 0.8264 has been broken and the steeper declining trendline is challenged. Another resistance stands at 0.8350. Hourly supports can now be found at 0.8248 (23/01/2014 high) and 0.8210 (24/01/2014 low).

"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160. Another key support can be found at 0.8082 (01/01/2013 low)."

UBS say:

"The important resistance is at 0.8349. While this holds, the cross remains vulnerable to extend its bearish trend to test support at 0.8160. A close below which would be the next bearish development."

11:53: Why the euro remains strong

The euro continues to trade higher against a whole host of currencies, why is it doing so well?

One reason is investor interest in Europe. As noted by Jan Rabe at Deutsche Bank, investor interest in European equities is at impressive levels:

"As Europe looks set for recovery, investors pour into W.Europe equity funds: Total equity funds recorded the fifth straight week of inflows (+0.1%), c60% of which went into European equities. Flows into DM equity funds remained healthy (+0.2%) and spread across all major fund categories. Western Europe equity funds lead the pack in the DM universe, again, with remarkable inflows (+0.5%. c$4.5bn). As the pace of earnings downgrades in Europe is slowing."

11:30: Remember, GDP figures are printed tomorrow

The first real UK-orientated risk the the British pound emerges on Tuesday.

The ONS will publish the fourth quarter advance GDP report tomorrow, the expectations are optimistic.

The markets anticipate the GDP YoY growth at 2.8% versus 1.9% released previously.

"In addition, we remind that the BoE hit the 2.0% inflation target in December and unexpectedly approached 7.0% unemployment threshold in November jobless report. Despite Carney’s efforts to calm down the upside pressures in GBP-complex, we believe that the mid/long-run belongs to GBP-bulls," says Ipek Ozkardeskaya at Swissquote Bank.

11:21: GBP/USD setbacks to be limited

"Having posted a new high on Friday reinforcing the bullish picture, any setback will be limited to support at 1.6447 ahead of 1.6310. Resistance is at 1.6747, a break above which would open 1.7043." - UBS.

10:50: Keeping an eye on USD dynamics

"The USD is reaching strong support areas against the EUR and CHF, and we don’t see a strong fundamental case for a weaker USD from here, so we suspect that the USD will perform reasonably well today," says an exchange rate forecast note issued by Lloyds Bank Research.

However, Lloyds do point out that activity on Friday underlined that the USD is no longer necessarily preferred to the EUR and CHF in risk negative conditions.

This is interesting as US dollar exchange rates have tended to benefit when markets sold-off in recent years.

"The corollary of this should be that any recovery in risk appetite should favour the USD, along with other currencies where growth is expected to outperform," say Lloyds.

10:47: Overbought conditions on GBP present headwinds

Luc Luyet at MIG Bank reckons upside moves in GBP/USD are likely to be constrained by overbought conditions:

"GBP/USD declined sharply last Friday, negating the positive implications of the recent new highs. Supports stand at 1.6451 (22/01/2014 low) and 1.6396 (20/01/2014 low). A resistance now lies at 1.6668 (24/01/2014 high).

The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the major resistance at 1.7043 (05/08/2009 high). Given the overall overbought conditions, a break of this level is unlikely in the next weeks. A key support stands at 1.6305 (25/12/2014 low).

09:46: Trend remains positive but selling interest grows

"The Cable remained in the tight range of 1.6475/1.6517 in Asia, after aggressively erasing gains from the fresh high of 1.6668 on Friday after Carney said that such strength in GBP should weigh on exports. Technically, the trend momentum remains positive yet selling interest is seen below 1.6475." - Swissquote Bank.

08:35: Lloyds say no reason to lose confidence in GBP

"GBP fell back in response to Carney’s speech on Friday, with the mere observation that a stronger pound might not help exports seemingly enough to justify a softer pound. However, we see little reason for the market to lose confidence in GBP at this stage, given the recent strength in the labour market data, and the dip on Friday should be seen as a buying opportunity once the market nerves seen on Friday calm down. GBP/USD should find good support in the 1.6460 area and below that there should still be good supports down to 1.64. EUR/GBP is likely to struggle to make ground above 0.83, with 0.8330 major resistance." - Lloyds Bank Research.

08:15: Markets deep in the red, British pound benefits

The British Pound (GBP) is looking to make up ground after Friday's losses. It is worth noting that today's gains come amidst similar negative market conditions to those seen on Friday. Was Friday's sell-off a 'short-squeeze' in a tumultuous market? Is the GBP benefiting from safe-haven demand on Monday? Or have markets decided that Carney and the Bank of England mean what they say when promising low interest rates for an extended period? These are the key elements to keep an eye on today.

08:10: Stay on the sidelines

UniCredit Bank are hesitant to call direction in GBP/USD at present:

"Cable’s sell-off last Friday back to 1.65 from peaks above 1.6650 was driven by some "back-pedalling" by Carney who warned - contrary to the latest minutes - that sterling appreciation may hamper growth. As a result of the mixed signals we would prefer to stay in the sidelines for now."