British Pound: USD/GBP (GBP=X) Brexit Paralysis might Stay for Long

British Pound: USD/GBP (GBP=X) Brexit Paralysis might Stay for Long

As disclosed earlier, current UK PM Theresa May would step down from office on June 7. Her departure would pave the way for the contest to elect the next successor for UK Leadership. Boris Johnson seems to possess the most chances to grab the PM’s seat. In his latest talk to the Press, he had mentioned that he would make Brexit happen at any cost. Boris added that EU-UK divorce would occur even in the absence of a Brexit deal.

Along with a higher probability of a Hard Brexit, chances of a third extension in the exit deadline also stays high. After the new PM taking control of the Brexit, he might negotiate the deal to alter the Irish backstop. However, the EU might likely remain stubborn over its stand and deceives the UK’s request. If the PM goes ahead with a Hard Brexit, then opposition from the EU Parliament is imminent. Such scenarios would add to a further delay in the whole process. Even during the same time, the EU Officials would be busy in electing the President European Commission. This situation would leave the Officials with less time to focus over other external affairs.

A recent CBI Employers group survey revealed the inferior status of UK’s Services Sector since last three months over Brexit delay. Reports suggested that around 8% of Companies have reported a sour sentiment in the business sector than the previous quarter. Also, among the Consumer Services Group, the numbers recorded 12%.

GBP/USD Influencing Events

There are no significant GBP-specific or USD-specific events lined up for the day. However, some low volatile USD events are coming up later the day.

The MBA Mortgage Applications computed since May 24 will report at around 11:00 GMT. The Redbook Index data would come up with the monthly and yearly data at 12:55 GMT.

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.29.

The projected upper bound is: 1.28.

The projected lower bound is: 1.25.

The projected closing price is: 1.26.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.5989. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 4 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 28.54. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -92. This is not a topping or bottoming area. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 13 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.263. Volume was 94% below average (consolidating) and Bollinger Bands were 68% wider than normal.

Open High Low Close Volume___
1.263 1.264 1.262 1.263 9,886

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.27 1.30 1.30
Volatility: 5 7 10
Volume: 127,018 152,725 174,826

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX GBP= is currently 2.5% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of GBP= (mildly bearish). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 11 periods. Our momentum oscillator is currently indicating that GBP= is currently in an oversold condition.

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