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Gbpusd-trading

GBP/USD - Record low yields hurt PoundUK 10-year gilt yield slipped to record lows, dragging GBP lower along with itself. The message is clear - markets are pricing-in a rate cut by Bank of England (BOE) next week. If Reuters poll is to be believed, the BOE is likely to cut rates but hold off QE for now. That makes sense, since we are yet to receive labor market data, wage growth data for post Brexit period. A symbolic rate cut is what market wants and the Bank of England (BOE) may just hand it over. GBP/USD The inverse head and shoulder pattern is in the making for so long and now the completion appears possible only if BOE stands pat next week. Upticks could be met with fresh offers till Aug 4. Selling is seen gathering pace once this week's low of 1.3056 is breached.
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GBP/USD - Play the breakout15-min chart pattern - sideways channel - 1.3165-1.3056 At the moment, there is little hint of a bullish/bearish move on charts. Hence, it is advisable to play the breakout. Above 1.3165 we could go to 1.3315 (23.6% of 1.5019-1.2789). On the other hand, below 1.3056, the spot is likely to test 1.29 levels. UK preliminary estimate of Q2 GDP is likely to show growth rate ticked higher to 2.1%. But remember, this GDP represents most of the pre-Brexit period. Hence, uptick in GBP may receive little attention from the markets.
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GBP/USD – odds of corrective move just increased furtherCable’s resilience and determination to hold above 1.31 handle despite batch of bearish news in Asia suggests an attempt is likely to be made at 1.3206 levels today. News hit the wires in early Asia that BOE’s Weale, a well known hawk, is calling for immediate stimulus. That pushed Cable lower from around 1.3160 to 1.3082 before bird quickly recovered above 1.31 handle. Other news was RBS who also owns NatWest are planning to implement negative rates strategy if the BOE pushes base rate below zero in future. Despite this Cable sits well above last Wednesday’s low of 1.3065 and above 1.31 handle. Consequently, a 100-pip up move cannot be ruled out. Meanwhile, on the downside 1.3064 needs to be breached on daily closing basis in order to signal short-term bullish invalidation.
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2
GBP/USD – Offered on horrible PMI, more losses below 1.3064Pound was offered across the board in Europe after the preliminary PMI readings for July highlighted a sharp deterioration of the activity. It is a known fact that PMIs have been on a declining trend since 2013, but the drop in July is obviously being blamed on Brexit. This forced markets to sell Sterling in anticipation of BOE rate cut/QE in August. Technical outlook Sterling’s retreat from the high of 1.3290 on weak data if results in a break below 1.3064 would suggest an end of the corrective rally from the post Bexit low of 1.2789 and open doors for a slide to 1.29 levels next week. In case, 1.3604 holds till Monday’s NY session, the odds of a rebound to 1.3315 (23.6% of 1.5019-1.2789) would increase. Further gains towards 1.35 would need a day end closing above 1.3315. Check out - Craig Erlam, Senior Market Analyst at Oanda presents his take on GBP/USD - www.youtube.com
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GBP/USD - Ready to test inverse head and shoulder neckline levelDespite repeated failure to take out/hold above 1.3315 (23.6% of 1.5019-1.2789) , the bird has been able to avoid a drop below 1.3061 Tuesday's low and has managed to form a small rising bottom formation this week. Consequently, the odds of the pair breaking above stiff resistance at 1.3315 today are high. In such a case, inverse head and shoulder neckline resistance around 1.3450 stands exposed. Once again, bullish invalidation is seen only if prices see a day end closing below 1.3061
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GBP/USD Forecast: 10-DMA support stands exposedPattern - Inverse head and shoulder on 4-hour chart Pair’s retreat from Friday’s high of 1.3480 followed by a day end closing at 1.3173 suggests the corrective move from the low of 1.2789 has ended and choppy trading is likely to be seen today. A failure to sustain above 5-DMA of 1.3230 would open doors for a drop to 10-DMA of 1.3093. On the higher side, we need a day end closing back above 1.3315 (23.6% of 1.5019-1.2789) levels to bullish momentum and could yield re-test of 1.35 handle.
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GBP/USD Forecast: Support at 1.33 stands exposedPair’s failure to stay above the post BOE high of 1.3472 in Asia followed by a retreat to 1.34 handle despite inverse head and shoulder breakout on 4 hourly chart on Thursday suggests the correction from post Brexit sell-off may have temporarily run out of steam and amid oversold hourly RSI could yield a re-test of inverse head and shoulder neckline level of 1.33. Dips could be met with fresh offers unless the US advance sales retail sales release is super strong, in which losses could be extended further to 1.3230 (rising trend line support on hourly). Only a day end closing below 1.3230 would suggest bullish invalidation and open doors for a re-test of 1.30 handle. On the other hand, daily closing above 1.33 today (appears likely in case of weak US data) would add credence to bullish inverse head and shoulder breakout and open doors for a more sustained rally towards 1.3641 (38.2% of 1.5019-1.2789).
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GBP/USD - inverse head and shoulder breakout on 4-hr chart Now we have almost confirmed an inverse head and shoulder breakout on the 4-hr chart, courtesy of Bank of England's decision to keep interest rates unchanged. This goes well with the head and shoulder breakout seen on the Gold/GBP 4-hour chart . Both the chart in a way add credence to each other and confirm the GBP is likely to move higher in the short-term. A daily close today in Cable above 1.3315 (23.6% fibo retracement) would open levels up to 38.2% Fibo.
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1
GBP/USD Forecast: stuck at 23.6% Fibo, expect a step backResistance – 1.3315, 1.3419, 1.3533 Support – 1.3206, 1.3119, 1.3077 Pair extended the corrective move in Asia to a high of 1.3337 as realization seems to have seeped into the markets that the Bank of England (BOE) may prefer to wait for more evidence of the Brexit led slowdown and in the economy and thus not cut rates this week. Cable’s nearly 500 pips rally from Friday’s low of 1.2850 could result in a short-term loss of momentum and sideways to negative action ahead of tomorrow’s BOE rate decision. Failure to take out 1.3315 (23.6% of 1.5019-1.2789) if followed by a break below the Asian session low of 1.3223 could yield a move towards 10-DMA level of 1.3117 levels. On the higher side, an hourly closing above 1.3315 could open up 1.3419 (June 28 high), although reckon the resistance is likely to stay intact ahead of the BOE rate decision.
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GBP/USD – Sideways to positive trading likely Cable’s bullish break from the 4-hourly falling channel followed by a convincing move to near 1.41 handle suggests a temporary bottom is in place at 1.2789 and could yield sideways to positive action, but reckon the hurdle at 1.3119 (previous cyclical low) could stay intact. On the lower side, only a move back below 1.30 from here would suggest a major failure of the corrective forces and open doors for a fall back to 1.2881 – 1.2789 levels.
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2
GBP/USD Forecast – 23.6% Fibo stands exposed As expected in the morning update, pair suffered losses after having failed to sustain above 5-DMA. However, the losses were cut short at 1.2850 after news Andrea Leadsom quit Tory leadership race. Theresa May now looks set to be crowned Prime Minister. Pair’s sharp reversal from 1.2850 has kept the bullish price-RSI divergence on the 4-hr chart intact and thus odds of a bullish break from falling channel have increased. Such a move would open doors for a corrective rally to 1.3315 (23.6% of 1.5019-1.2789). On the other hand, another failure at 1.30 if followed by a break below today’s low of 1.2850 would signal a possible break below 1.2789 and further drop to 1.26 handle.
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GBP/USD forecast – Fresh losses if rejected at 5-DMAResistance – 1.2949, 1.30, 1.3119 Support – 1.2927, 1.2880, 1.2789 Pair’s repeated failure to sustain above 1.30 last week if followed by a failure to sustain above 1.2949 (5-DMA) today would open doors for a drop to 1.2880. A violation there would expose the latest cyclical low of 1.2789. On the higher side, 1.30 needs to be taken out on the day end closing basis as such a move would signal a short-term bottom is in place at 1.2789 and could yield a move to 1.3207 – 1.3315 levels. Yen is being sold on hopes of fiscal stimulus. The resulting uptick in the GBP/JPY may help the pair test 1.30 handle today.
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GBP/USD – Another failure above 1.30; looks weakCable’s repeated failure to sustain above 1.30 handle despite bullish price divergence on the RSI amid mixed batch of US data indicates increased likelihood of the pair revisiting recent cyclical low of 1.2789, especially if prices fail once again on Monday at 1.30 and/or 5-DMA. On the higher side, we need a convincing break above 1.30 as it would add credence to bullish price RSI divergence on 4-hour chart and open doors for 1.3119 and 1.3207.
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GBP/USD – Fate of corrective rally dependent on NFP dataResistance – 1.30, 1.3047, 1.3087-1.3119 Support – 1.2880, 1.2864, 1.2789 Despite pair’s retreat from the high of 1.3046 the odds of the corrective move remain, since the pair is trading well above the latest cyclical low of 1.2789 and has a bullish price-RSI divergence on the 4-hour chart. Hence, another attempt at 1.30 could be made ahead of the non-farm payrolls report. On a weak data, the pair could test falling channel resistance seen at around 1.3087. A 4-hour closing above the same would indicate a short-term bottom is in place and the pair is on a more sustained path of recovery. On the other hand, a super strong data (strong NFP + strong wage growth numbers) could yield a re-test of 1.2789 levels.
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GBP/USD - bullish divergence, watch for break abv daily highCable's recovery from the 30-year low of 1.2789 hit in Asia confirmed a bullish price RSI divergence on the 4-hour chart. This has opened doors for a corrective rally. However, prices need to break above the daily high of 1.3027 as such a move would add credence to the bullish price RSI divergence and would set in motion a technical correction to 1.3119 - 1.3206 levels. Still, bearish invalidation is seen only if prices see a day end closing above 1.3315 (23.6% of 1.5019-1.2789). On the other hand, a break below 1.2789 would negate the bullish price rsi divergence and open doors for a further slide to 1.25 levels.
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GBP/USD – At fresh 30-yr lowGBP/USD pair dipped to a low of 1.2791 in Asia; the lowest since June 1985. Cable sell-off triggered a wave of a risk-off trading, pushing treasury yields lower and Japanese Yen higher. As of now, the pair is trading around 1.29 handle. There is very little logic in catching the falling knife. The volumes were very low in Asia and continue to be so. Hence staying on the sidelines appears as the best option. Nevertheless, traders could keep an eye on the 4-hour chart. A bullish divergence could happen if the 4-hour candle sees a positive move and pulls the RSI above 30.00. In such a case, prices could head back to 1.3119-1.32 levels.
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GBP/USD – Eyeing trend line supportGBP/USD pair has dropped to a fresh 30-year low of 1.3055 levels. It seems the markets are pricing-in a Bank of England (BOE) rate cut in August. As of now, there is very little on chart that suggests a possibility of a sharp recovery except the daily RSI which is oversold once again. The pair could find support around 1.30054 which is a trend line support (join Jan 21 low and Feb 29 low and extend the trend line). Bulls should hope for a positive daily closing from here today or later this week as such a move would create a bullish price RSI divergence and open doors for a technical recovery. A daily closing below 1.30 would only add to the bearish pressure around Pound.
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GBP/USD could peep above 1.33 againResistance – 1.3303, 1.3341, 1.34 Support – 1.3226, 1.3119, 1.30 The inverted hammer candle formation on the daily chart following a two-day sideways move indicates the pair could head higher to 1.3341 levels. A violation there would expose 1.34 On the other hand, a breakdown of support at 1.3226 (June 24 low) could yield 1.3119 (June 27 low). Day end closing below 1.3119 would mean the corrective rally has ended and the larger downtrend has resumed, thus opening doors for 1.29 handle.
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UK manufacturing PMI - strong data could be ignoredUK manufacturing PMI data for the month of June due in an hour or so is likely to show the pace of expansion in the manufacturing sector was unchanged at 50.1. The PMI was a market mover till December 2015. Moreover, Cable was the one who was more responsive to the manufacturing PMI release. However, the data lost relevance ever since Brexit fears began dominating the wires. Strong data may not help Cable In the current scenario, a better-than-expected data is irrelevant. This is because the reading would represent major part of the pre-referendum period (prior to last Friday). Things have changed significantly after Britons voted in favor of exit. Moreover, BOE’s Carney has hinted at a possibility of rate cut this Summer if the Brexit led slowdown in the UK economy is more than expected. Hence, a strong data would be ignored, while a weaker-than-expected figure (below 50.1) would trigger speculation that the sector will suffer even more (courtesy of Brexit) in the coming months and thus increase odds of a BOE rate cut. Consequently, a weak data could see GBP/USD drop below last Friday’s low of 1.3226. Technicals remain in favor of a drop to 1.3226 as discussed in the London morning report titled "GBP/USD – Re-test of Friday’s low likely"
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