America's anti-corruption law deters foreign investment. Britain's is smarter. The GBPUSD exchange rate helps too.

Last week, bulls and bears alike waited for $GBPUSD to correct its rally. The only thing the market gave us were shallow retracements that found support at key levels. In fact, the US non-farm payrolls report was initially met with a USD rally that gave cable its steeper correction only to give way to USD weakness later in Friday trading that took $GBPUSD higher. Can we expect fundamentals this week to once again give bulls a correction for better buying opportunities? Or will bears gain momentum? With the Bank of England “guarenteeing” more QE at its meeting this week, will $GBPUSD get the correction everyone has been waiting on?

• GBPUSD 03 February 2012 (Gav’s trading blog)
• Daily Chart Art – February 3, 2012 (Baby Pips)
• Long GBPUSD correcion (Chart.ly)
• Bank of England to print further £50 billion (The Telegraph)
• Employment Report (Federal Reserve Bank of Cleveland)
• Today’s Job’s Report in Pictures (off the charts)
• Is BLS Data Skewed? (Trimlabs Money Blog)

Image credit

Spain & Greece – The Big Picture

Chop City In Forex – Seeking Alpha

IS EUROPE BETTER OFF WITHOUT THE EURO? – Pragmatic Capitalist

Europe stocks jump on strong U.S. jobs data – WSJ

EURO GOVT-Bunds fall after upbeat U.S. jobs data – Reuters

Yardeni Says Fed Is Engaging in ‘Financial Repression’ (Audio) – Bloomberg

Swissqoute’s Gregory Avoiding European Assets (Audio) – Bloomberg

Reuters Today: Merkel woos China on euro and investment (Video) – Reuters

Asia’s Week Ahead: China Inflation Data (Video) – WSJ

Europe crisis hits the “real economy”(Video) – Reuters

Sovereign ratings when default can come explicitly or via inflation – VoxEU.org

Germany’s policy prescription re the Euro Zone is (quite rightly) being questioned – The Big Picture

Is There Long Dollar Liquidation; Where Do We Sell The Yen? – Seeking Alpha

EURUSD dynamic shifts post EU summit but market discipline lurks – tradingfloor.com

China’s capital flight looks ready for take-off – FT

FOREX-Euro falls on Greece worries, sheds earlier gains – Reuters

EU official: Greece needs extra euro15 billion – AP

Saxo’s Beecroft Says ECB’s ‘Morphine’ Won’t Last (Audio) – Bloomberg

EU’s great kowtow to China – (Video) – Reuters

Sterling stronger across the board

More market participants see sterling going higher now across the board. It isn’t very surprising to see a melt up into next week’s Bank of England rate announcement where the BoE is expected to announce more QE. Of course, fundamentalists would expect then sterling to weaken especially since we have yet to get a major pullback in $GBPUSD’s monster rally off the lows. The charts, however, are very bullish making sterling’s reaction after the BoE announcement all the more interesting.

• GBP/JPY: Safer Speculation On BOJ Intervention (FX360)
• GBPUSD consolidates, then surges to highest level since Nov 2011 (FXDD)
• January Effect high in place in EURUSD (PeterLBrandt.com)
• EURGBP Update (50′s Blog)
• A Co-ordinated Devaluation? (WSJ) [video]
• Sheer Scale of U.K. Austerity Measures Revealed (WSJ)
• UK Jan Construction PMI 51.4 Vs 53.2 In Dec (Forex Live)

Image credit

Weak USD causing a bull market in sterling

$GBPUSD has confirmed suspicions of a trend reversal today with its breakout above the key 1.5770 resistance level. This level had capped rallies since December and kept price pressured to produce a new spike low at 1.5233. However, you can look at sterling performance in other pairs like the $GBPNZD and $GBPAUD to see that the move in cable is much more a weak USD move than a strong GBP move. Watch to see if this strength against the USD starts to translate into more broad-based sterling strength in the coming weeks.

• Forex EURUSD, GBPUSD, EURJPY Key Levels and Bias (Tics&Pips)
• GBPNZD daily chart; elliot wave count (Chart.ly)
• GBPUSD Weekly Ichimoku (Twitpic)
• GBP/USD. Long bullish run (Chart.ly)
• UK’s pound has been super very strong vs EUR&USD for awhile (Chart.ly) [interesting look at the $EURGBP]
• A look at the correlation between EURUSD and GBPUSD (Twitpic) [chart]
• The European Superhighway of Debt (Demon-Ocracy.info) [infographic]
• Everything You Need To Know About Europe In Three Charts (Zero Hedge)
• 3 Reasons Why You Shouldn’t Be Bummed About U.K.’s GDP Report (BabyPips) [MAY be why we see sterling start to strengthen across the board]

Image credit

Understanding past and future financial crises – VoxEU.org

EUR Short Covering Just Started? – Seeking Alpha

WHERE ARE RATES HEADED? 3 SCENARIOS – Pragmatic Capitalist

The perils of Mario Draghi’s €1.5 trillion blitz – Ambrose Evans-Pritchard

Reader Mailbag: “Two words for delusional China bulls: PER CAPITA” -Black Swan Blog

Greek debt swap talks boost optimism, but anxiety about Portugal remains high - nasdaq

Fed’s Plosser: Inflation needs careful watching – WSJ

FOREX-Euro boosted by factory data, Greek hopes – Reuters

CIBC’s Stretch Says Euro Will ‘Correct Lower’ (Audio) – Bloomberg

Sterling Digest: January 31, 2012 – @StockTwitsFX

Facebook Billions, Brussels and Data – @upsidtrader

Greek Drama, Yen Strength – Seeking Alpha

China Slowdown May Impact Forex Trading – Seeking Alpha

INTERVENTION COULD DERAIL THE YEN RALLY – Pragmatic Capitalist

Greek Bond Default Decision Tree – The Big Picture

Does the renminbi matter? Evidence from China’s disaggregated processed exports – VoxEU.org

CNBC Video: My Outlook for Euro -@KathyLien

China’s very mysterious data – Ambrose Evans-Pritchard

Swordfish’s Jenkins Says Haircut Equals Greek Default (Audio) – Bloomberg

Shanghai pushes yuan plan (Video) – Reuters

Reuters Breakingviews: Austerity won’t save Greece & Portugal – Reuters

Going against flows today may not end well

Today is the last day of the month. In the forex market, the month end tends to be significant day. The last day of the month is when capital flows truly take over as banks and investors square positions (either taking their profits or cutting their losses) for their month of investment activity. Take care and understand which way the capital is flowing today. It’s a bad day to be a contrarian.

• GBPNZD daily chart (Chart.ly)
• GBP/USD Daily Outlook Jan. 31, 2012 (Daily Forex)
• GBPUSD Key Levels and Bias (Tics&Pips)
• Chart Review: Australian Dollar Hitting Critical Junctures (DrDuru.com)
• GBPJPY Update (Chart.ly)
• EURGBP Update (50′s Blog)
• UK and Czech Republic refuse to sign EU fiscal pact (euronews) [video]
• The EU fiscal draft treaty: in full (The Telegraph)

Image credit

UK gets as good as it gives

A very quiet week on deck with the economic calendar very light out of the UK. This week, all traders and market participants look ahead to Friday’s US non-farm payrolls. For sterling traders, the week should be very technical. $GBPUSD should see a pullback after rallying for 2 consecutive weeks. The $EURGBP set up last week for a resumption of its bear trend and the $GBPAUD continues to consolidate at its lows.

• Potential inverse H&S on GBPCAD daily chart (Chart.ly)
• Chart on EURGBP (Twitpic)
• GBPUSD Update (50′s Blog)
• Living In A QE World (The Big Picture)
• The Greater Depression (The New York Times)
• UK GDP Slips. No Big Deal (EconoMonitor)
• Sage Weekly Letter (The Stock Sage)
• Bollard quits Reserve Bank (Stuff)

Image credit

Contrasting GDP outlooks this week prove this market is nuts

GDP numbers from both the UK and the US were released this week. The British economy slipped into recession while the US economy actually grew 2.8% in the same quarter. Such a contrast in economies in normal market conditions would have set the $GBPUSD to break down. However, the markets have been anything but “normal” since 2008. So here we are in the midst of a $GBPUSD bull rally that has gone on for 10 consecutive trading sessions. It’s been incredible. While the $GBPUSD is certainly capable of such moves (anything can happen the markets, right), we haven’t seen a move like this in quite some time. While price never moves in one direction forever, it is understandably hard to step in front of this freight train.

Have a great weekend cable bulls. You’ve certainly earned it.

• Economy Grows Just 1.7% In 2011. What Now? (The Basis Point)
• Dollar Falls on Fed, Potential Greek Debt Deal (Credit Writedowns)
• USD Losing Reserve Currency Status: A Timeline (Seeking Alpha)
• UK: Into Recession (EconoMonitor)
• Osborne needs to come up with radical growth policies, and soon (Coffee House)
• BOE Miles: “Presumptuous” To Assume More QE In Feb (Forex Live)

Image credit