British Pound: USD/GBP (GBP=X) forecasts downgraded as Brexit saga drags on into year-end

British Pound: USD/GBP (GBP=X) forecasts downgraded as Brexit saga drags on into year-end

The Pound is likely to remain depressed into year-end and beyond according to the latest forecasts from Barclays, while both the Dollar and Euro are set to face trials and tribulations of their own before the curtain closes on 2019. 

Currency markets entered the second half of the year in a state of flux Monday, with a lot about the future outlook likely to be determined by central bank policy meetings  set to take place through the summer months, beginning with the Federal Reserve in just a few weeks time. 

Until recently the U.S. Dollar had been the biggest draw for investors in the currency markets after the Federal Reserve raised its interest rate on four occasions in 2019, taking it up to a post-crisis high of 2.5% and drawing capital flows away from other G10 units. 

However, the statistical hangover from President Donald Trump’s tax cuts of last year as well as adverse impact upon manufacturers from the trade war with China are widely expected to see the U.S. economy slow in 2019, leading the Fed to call an end to the Dollar rate by cutting its interest rate. 

As a result the market entered 2019 with consensus looking for a broad Dollar decline and barely six months in, the Fed duly signalled it could soon begin to reduce U.S. borrowing costs in order to sustain a waning economic expansion. 

Barclays’ currency strategists have tipped their hat to this idea in their latest forecast book but are still swimming against the tide of consensus opinion with some of their projections. The bank did not buy into the idea of Fed cuts and a Dollar decline at the beginning of the year. 

Overall, the bias in prices is: Downwards.

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 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 14.6981. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 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 43.73. 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 22 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 -23. This is not a topping or bottoming area. The last signal was a buy 9 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 buy 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.264. Volume was 97% below average (consolidating) and Bollinger Bands were 40% narrower than normal.

Open High Low Close Volume___
1.264 1.265 1.263 1.264 5,004

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

Moving Averages: 10-period     50-period     200-period
Close: 1.27 1.28 1.29
Volatility: 6 7 10
Volume: 110,762 134,401 170,279

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 2.1% below its 200-period moving average and is in an upward 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 bullish on GBP= and have had this outlook for the last 4 periods.

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