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Poundsterling

GBP/USD Sell Opportunity The pound has been dropping since June 2021. In the last six months, the pound has not been able to break the trendline resistance and support the trendline. Currently, the GBP/USD is hovering close to trendline resistance. More than 450+ pips have risen from trendline support in the last 20 days. That's why I am expecting that market may have some corrections. We should not sell if only the market stays at the resistance level. We can keep in sell mode from the resistance level only when the market creates a bearish pattern. We will enter a sell position only when the GBP/USD creates a bearish pattern from the trend line resistance. If the GBP/USD closes below the current level of 1.3472, we can think of the sell position as well. Because breaking below the 1.3472 will confirm immediate support trendline breakout, or if we see the pound tested 1.3610 / 20 rate, we can also execute our sell order with 80/100 pips stops.
Short
by Gold_Trading_Expert
2
GBP JPY - FUNDAMENTAL DRIVERSGBP FUNDAMENTAL BIAS: WEAK BULLISH Monetary Policy They did it again! After leading markets to believe that a Dec rate hike was looking unlikely the bank surprised by announcing a 15bsp rate hike. Recall we had external member Saunders (who voted for a hike in Nov) suggested there could be benefits in waiting before moving on rates until some of the uncertainty from Omicron dissipates. We also had BoE’s Mann a few days before the meeting saying it was premature to talk about hikes but ended up voting for a hike with an 8-1 vote split and BoE’s Tenreyro the only dissenter. The bank lost a lot of the credibility that it had left, but in the end, they did the right thing (in my opinion at least) to stay data dependent and hike given the recent flurry of much better-thanexpected econ data. The consensus view was that current price pressures warranted tighter policy in the near-term, with inflation expected to peak close to 6% in April (up from previous projections). One negative was of course growth which is expected to push lower given the Omicron variant and associated restrictions. For now, the bank’s move is a hawkish development for the GBP, with Omicron and incoming data key considerations for the rate outlook going forward (a 25bsp hike is fully priced for March). Economic & Health Developments Even though activity data has been slowing, the economy is not expected to fall off a cliff by any means. Growth expectations for 2022 still places the UK in front of the G7 which means growth differentials are still favourable for the GBP. It seems like the solid economic data (beats for CPI, Jobs, Retail Sales) were enough to convince the BoE to hike, and as long as the data remains firm it should keep the odds of additional tightening on the table. Focus now turns to Omicron to see how it impacts incoming data and affects the rate outlook going into 2022. Political Developments Even though a Brexit deal was reached last year, some issues like the Northern Ireland protocol remains, and with neither side willing to budge it seems like these issues are here to stay for now. There has been heated rhetoric from both sides with the UK threatening to trigger Article 16 and the EU threatening to terminate the Brexit deal if they do. For now, these are just threats, but any actual escalation could increase the odds of seeing so risk premium built into Sterling. Furthermore, political uncertainty surrounding PM Johnson and the lack of trust from his own party opens up another can of worms for Sterling (the currency usually doesn’t perform well when the future of a PM is brought into doubt), and that remains a driver to watch in the sessions ahead. CFTC Analysis Latest CFTC data showed a positioning change of +11548 with a net non-commercial position of -39171. It seems like both price action and positioning has caught up with the BoE’s hike in December with Sterling putting in a decent week of gains and positioning also seeing a sizeable reduction in net-shorts. The Week Ahead In the week ahead it’s quiet on the data front for the UK once again with GDP the only real data point of concern but we are not expecting much from it. Arguably one of the bigger drivers for the GBP will be what happens to overall risk sentiment as well as the USD. As a currency with a slightly higher beta, the Pound can be sensitive to overall risk sentiment so keeping track of how equities markets are doing will be important. Furthermore, even though we maintain a bullish view on Sterling, the recent run higher has been rather one-sided, and we are inching closer towards some very key technical resistance levels around 1.3600. One possible trigger that could see GBPUSD break through that though is Wednesday’s US CPI. After the push lower on Friday, the DXY broke through key support, and a big miss in CPI which means less need for very aggressive Fed policy is not a good look for the USD. JPY FUNDAMENTAL BIAS: BEARISH 1. Monetary Policy At their Dec meeting the BoJ kept policy mostly unchanged apart from unanimously voting to scale back emergency pandemic relief funding from March which includes tapering corporate bond and commercial paper buying, but they did also vote to extend a portion of the pandemic relief loan scheme to March for smaller firms. As always, the BoJ said they are ready to add additional stimulus and easing steps as the economy needs it. The bank reiterated that even though the economy has picked up it does still remain in a severe situation due to the COVID-19. The bank remains dovish and is unlikely going to change anytime soon. 2. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving for the JPY; and although monetary policy expectations can still prove marketmoving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. As the Fed and other banks start to normalize, we do need to remember that it means those fiscal and monetary policy support is being reduced, which could mean a lot more volatility for markets in the weeks and months ahead. Even though that doesn’t mean our med-term bias for the JPY has changed, it simply means that we should expect more risk sentiment ebbs and flows this year, and the heightened volatility can create some fantastic directional moves in the JPY, as long as yields play their part. 3. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares a strong inverse correlation to moves in yield differentials, more specifically in strong moves in US10Y . However, like most correlations, the strength of the inverse correlation between the JPY and US10Y isn’t perfect and will ebb and flow depending on the type of market environment from both a risk and cycle point of view. With the Fed tilting more aggressive, we think that opens up more room for curve flattening to take place with US02Y likely pushing higher while US10Y underperform. In this environment we do see some mild upside risks for the JPY, but we should not look at the influence from yields in isolation and also weigh it up alongside underlying risk sentiment and price action in the USD of course. 4. CFTC Analysis Latest CFTC data showed a positioning change of -9160 with a net non-commercial position of -62262. Even though the JPY’s med-term outlook remains bearish , the big net-shorts for both large speculators and leveraged funds always increases the odds of more punchy safe haven flows and mean reversion when risk sentiment deteriorates. However, despite risk sentiment taking a hit in the past trading week, the JPY has remained pressured as the move in US yields kept any JPY rallies in check. 5. The Week Ahead In the week ahead the biggest focus for the JPY will be on overall risk sentiment with the big rally in risk sentiment going into the last few trading days of the year with S&P futures managing to squeeze out another all-time high and Nasdaq futures getting very close to doing the same. The big amount of upside has been mostly attributed to equities taking the path of least resistance ( med-term bias remains tilted higher) and moves was probably exacerbated by thinner liquidity and lower volumes. If that momentum can continue at the start of the new year, we can expect to see further downside for the safe haven JPY and will be a key focus for the currency for the week ahead. Apart from that, keeping an eye on US yields will be important as always.
by thunderpips
11
GBPJPY Short after two patternsHi All So GBPJPY after more than 600 pips up move with no fall of 60 pips. Now he is at a strong Bollinger Band resistance and Fibonacci resistance. At the small time frame you can see in the photo there are 2 patterns, the first break to the upside and get very nice support from the 2 trendlines that were touching each other on the same price, now because of the big time frame resistance, I expect that this uptrend line resistance will work and the price will drop to retest the support and even to break it to the downside. Also since 2010 was only 1 time (2019) that price by the first day of the year didn't go the opposite direction of the last day of the year, so on Friday (end of 2021) we end as a blue candle, so the first trading day of 2022 supposed to be red. Just showing my options .
Short
by StudyWallStreet
3
Today’s Notable Sentiment ShiftsSafe-havens – USD, CHF and JPY came under pressure on Wednesday as traders turned more positive about the global economic outlook, even as Omicron cases rocketed and investors braced for more volatility. Indeed, Brown Brother Harriman argue that “risk-off impulses continue to ebb. we are likely in a consolidative period for now given the lack of any major new drivers.” GBP – Sterling rose on Wednesday, despite official data showing Britain’s economy grew more slowly than previously thought in Q3 as participants found solace in reports that the UK government would not be announcing further coronavirus restrictions this side of Christmas.
by thunderpips
9
Today’s Notable Sentiment ShiftsGBP – A rebound in global risk appetite pushed the Britain pound up against the dollar and euro on Tuesday, after Britain announced support for businesses hit by the latest wave of COVID-19 infections amid fears of new restrictions on activity. Commenting on GBP’s recent performance and outlook, however, ING notes that “the fast spread of the Omicron variant in the UK may keep some pressure on GBP around Christmas, in particular as the government may opt to impose some new restrictions.” Although, adding that investors likely still have short positions on the pound, which could help limit its losses, but concluding that “risks still appear moderately skewed to the downside”.
by thunderpips
13
The Pound Is Rising on Additional Interest Rate Hike ExpectationThe Bank of England (BoE) has unexpectedly lifted its interest rates to 0.25% from 0.1%, which is the rate at which rates have been set for the last three years without any changes. The move was made on Thursday as inflation in the United Kingdom jumped to 5.1% year-on-year in November from 4.2% a month before. Moreover, the BoE indicated in its statement that inflation would continue to expand to 6% by April 2022, well above its 2% target. The United Kingdom has become the first developed country that has hiked interest rates. Investors suggest that monetary policymakers are ready to make an additional interest rate hike by 25 basis points to 0.5% next February. The Federal Reserve (Fed) announced this week that it would increase its tapering to $30 billion a month starting mid-January from $15 billion, where it stands at the moment. This could mean an end to its bond-buying program in March 2022. According to the Fed’s dot-plot chart the American monetary watchdog may raise interest rates three times next year and another three times in 2023. What could this particularly mean? In the first place the U.S. Dollar would be a leading party to the European single currency as the European Central bank (ECB) noted on Thursday it will continue with its stimulus bond buying program beyond April 2022. However, some spikes of the Euro should not be excluded. The Pound becomes a leader vs the Greenback, while not only receiving technical reasons for a rally, but fundamental ones too. Once again, I have to note that the Cable is moving alongside the “falling wedge” reversal pattern that may push the Cable to 1.3800. The resistance line of this wedge was broken last Friday, and last Thursday the Cable received additional reasons for the rise finishing the day above EMA13 and EMA21 on the daily timeframe chart. The Pound may receive an additional spin as the “morning star” pattern would be completed this week. The next target for the Cable would be 1.3400-1.3450 that is a resistance of the December 2020 and the September 2021 lows. The closest support level is at 1.3280-1.3285, where it would be certainly interesting to open buy positions.
Long
by scavoanastasiia
SHORTING GBP/JPYTechnicals: As it currently stands, HJ is at a strong level of supply where we have started to see selling pressure come into play. We’ve seen a bearish engulfing, followed by a double top formation at supply. The double top was confirmed after a shooting star on the 30M timeframe. This is my confirmation to get into the trade, however, Monday usually contains manipulation, so I tend to not trade on Mondays, despite this, I like the look of this trade and the risk to reward ratio is there (4.4:1) Fundamental summary: The UK are looking to implement tighter Covid restrictions to reduce the spread of the new Covid variant ‘OMICRON’, this is likely to cause the pound to drop in value against the yen which is seen as a safe haven during times of uncertainty – known as risk off. Please let me know your thoughts and trade with caution!
Short
by TomBray1
GBPAUD Overview from high TFGBPAUD was trading within a channel that it recently broke out of and now retracing back down. As we can see on the way down we broke a key order block which can now become a breaker block (resistance) as the price just tapped back into it. Right below we can see we have another key OB which the price can move down into. If we break back into the breaker block we can see the price moving higher, however if the resistance holds we can move into the lower OB marked.
by opes_trading_group
GBP USD - FUNDAMENTAL DRIVERSGBP FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy BoE credibility took a hit in Nov when the bank voted 7-2 to keep rates on hold and took a clear U-turn compared to hawkish comments from the likes of Bailey and Pill. Going into the meeting markets had fully priced a 15bsp hike in 4Q21, and even though analysts were divided on whether that hike would be in Nov or Dec, the bank’s statement and tone saw markets pushed back hike bets. This came as a result of the bank’s dovish tilt regarding GDP, CPI as well as a change of tone which said hikes would only be appropriate in the coming months if the labour data comes in line with the bank’s projections. We were anticipating a violent repricing for med-term rate expectations stressing that rates markets were too aggressively priced, but the U-turn in tone surprising and placed lots of focus on incoming labour & CPI data to gauge when lift off will occur. The bank pushed back against attacks on their credibility and said they won’t endorse market rate pricing. Overall, it was a dovish tone, and the hit to credibility means markets will be more careful with jumping the gun on their forward guidance going forward. As the bank bases their economic projections on a market implied bank rate, there is chances that things like GBP and CPI see upward revisions if the med-term market expectations for higher hikes trade a bit more realistic. 2. Economic & Health Developments Even though activity data has been slowing, the economy is not expected to fall off a cliff by any means. Furthermore, the very solid beats across the board in recent economic data have for many solidified the odds of a 15bsp hike in Dec. It was interesting to note that both BoE’s Pill and Bailey, even after the solid data, offered some slightly sobering remarks last week which some took as a sign that a Dec hike is not a guaranteed decision just yet. Of course, the Oct jobs print in December will be very important for markets as another beat there will leave the BoE with very few reasons not to hike rates. Interestingly, not even the more optimistic comments from the likes of Haskel (dove) was enough to drag the GBP out of its slumber. 3. Political Developments Even though a Brexit deal was reached last year, some issues like the Northern Ireland protocol remains, and with neither side willing to budge it seems like these issues are here to stay for now. There has been heated rhetoric from both sides with the UK threatening to trigger Article 16 and the EU threatening to terminate the Brexit deal if they do. For now, these are just threats, but any actual escalation could increase the odds of seeing so risk premium built into Sterling. Also keep the fishing challenges with France in mind as well. 4. CFTC Analysis Latest CFTC data showed a positioning change of -4320 with a net non-commercial position of -38899. Sterling is now the third largest net-short among the majors and also dipped into net-short among leveraged funds as well. That shows us sentiment continues to deteriorate for the GBP after the Nov 4 policy meeting, and that is despite recent economic data coming in much better-than-expected. 5. The Week Ahead Patience will be very important for the week ahead when it comes to the GBP. Friday’s comments from BoE’s Saunders were quite surprising, with the most hawkish member on the MPC sounding strangely dovish on the eve of the Dec policy meeting. Saunders explained that the Omicron variant could mean that there is scope to wait for more data before adjusting policy, if adjusting policy is necessary (that doesn’t sound like a hawk ready to vote for hiking rates in a few days’ time). Interestingly we’ve seen some of the more dovish members among the MPC take a slightly more optimistic and hawkish turn with Haskel giving a green light for rates to move higher in we see another solid job print next week. Thus, for now, until we get the job data, it might be best to keep Sterling on the side lines for now. USD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy Another bank that was hawkish in deed by dovish in word in their Nov policy decision. The Fed announced tapering as expected, with purchases to be reduced at a pace of $10bln in Treasuries and $5bln in MBS per month and explained that a mid-2022 conclusion is their base case. There were also some hawkish language changes about inflation , with the bank dropping previous comments that called inflation transitory and replacing it with ‘expected to be transitory’, basically leaving some optionality to pivot more aggressively with tapering should price pressures stay sticky for too long. However, Fed Chair Powell did a really good job to put on a familiar dovish front by explaining that they see the current price pressures as driven by supply bottlenecks and still see those pressures cooling down in in 1H22, essentially giving themselves half a year of ‘tolerating’ the current inflation overshoot. Apart from that, Chair Powell explained that they would need to see maximum employment before their conditions for a lift off in rates would be met, and also explained that it’s likely that full employment could be reached by mid-2022. That endorsed the idea that a 2h22 hike is possible, but the Chair refused to provide any idea of what maximum employment would look like. On the rate front, Powell also explained that they think they can be patient with rates right now as they want more time to see in what shape the economy is in after the current covid shocks have calmed and after bottlenecks have eased. Overall, a policy meeting that was hawkish in their actions but dovish in their words. 2. Real Yields With a Q4 taper start and a faster 2022 taper on the table, further material downside in real yields looks like a struggle, and upside from here should be supportive for the USD. However, we are growing cautious of nominal yields right now as an aggressive Fed is not a positive for US10Y . But it also means there are risks that inflation expectations fall and place upside pressure on real yields. 3. Global Risk Outlook Based on the recent global economic data the expectations of a possible reflationary setup have developed as the Citi Economic Surprise Index continues to push higher. Even though this was seen as a possible negative for the USD, the recent hawkish tilt from the Fed (accompanied by the Omicron variant) has seen drastic curve flattening in anticipation that the Fed might be on its way to a policy mistake, and we could see a possible repeat scenario like we had back in 4Q18. If that happens, it should be an additional tailwind for the USD, which means for now a lot of hinges on the new variant. 4. CFTC Analysis Latest CFTC data showed a positioning change of +104 with a net non-commercial position of +35879. USD longs are looking stretched, and arguably have been looking stretched for the past few weeks. With large speculators at their highest level since 2019, there is some scope for some mean reversion lower in the USD. It’s also important to remember that a lot of the Fed hawkishness should now be reflected in the price. The biggest risk to upside is if the med-term growth and inflation outlook materially deteriorate from here. 5. The Week Ahead With Fed Chair Powell already giving the markets the prewarning of a faster tapering decision next week, there isn’t much that will change that with this week’s line up of economic data. The biggest even will no doubt be the CPI print on Friday, where markets are expecting a new cycle high for consumer prices. With so many expectations baked in for the Fed and with so many higher inflation projections doing the rounds, the highest tradable event for the USD this week would be a huge surprise miss as that will catch everyone by surprise and offer some decent downside in the short-term for the USD. Even though a beat in the CPI data should see further expectations of tighter policy, markets are so close to pricing in 3 hikes for next year again which means the upside on a beat might be more limited compared to the Nov CPI print.
by thunderpips
8