British Pound: USD/GBP (GBP=X) forecasts downgraded amid mounting election risks

British Pound: USD/GBP (GBP=X) forecasts downgraded amid mounting election risks

The Pound is facing a protracted period of weakness as the risk of a general election and socialist government mounts, according to new forecasts from ING Group, while the Dollar is just months away from a turn lower that brings its 18-month rally to an end although the Euro could fail to capitalise on this. 

Sterling has been buffeted in recent weeks by a volatile domestic political climate that is now seen making another general election all-but inevitable. This is a problem for investors because it would risk installing a Marxist opposition leader, who has a profligate nationalisation agenda, in 10 Downing Street.

Now, forecasts for Sterling have been downgraded ahead of what could be a testing winter period for the British currency. This comes as markets sit at an inflection point, with Federal Reserve (Fed) interest rate policy and the outlook for the Dollar both being central to what happens next, according to ING.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1.27.

The projected lower bound is: 1.24.

The projected closing price is: 1.25.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 black candles.

An on-neck line occurred. This is a bearish pattern where prices should move lower when the white candlestick’s (i.e., the most recent) low is penetrated.

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 3.1446. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 17 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 30.86. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 12 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 -157.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.254. Volume was 98% below average (consolidating) and Bollinger Bands were 45% narrower than normal.

Open High Low Close Volume___
1.253 1.254 1.253 1.254 3,484

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

Moving Averages: 10-period 50-period 200-period
Close: 1.27 1.28 1.29
Volatility: 6 6 10
Volume: 121,221 141,793 172,712

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 3.1% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 24 periods.

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