British Pound: USD/GBP (GBP=X) Investors Eye PMI Reports
fter a pause for New Year’s, investor focus is on the British PMI releases for December, which are important gauges of key sectors in the economy. Later on Thursday, we’ll get a look at Final Manufacturing PMI, which is expected in at 47.6 pts. This is slightly higher than the initial reading of 47.4, but nonetheless points to contraction. This will be followed by Construction PMI on Friday and Services PMI on Monday. Both releases are projected to indicate contraction, with estimates below the 50-level.
Roller Coaster December for Cable
The pound showed strong volatility in December, a microcosm for the pound’s fortunes in 2019. GBP/USD fell as low as 1.1958 in early September, as Brexit caused plenty of political drama in the British parliament. Only three months later, the pound soared above the 1.35 level, as the markets were elated with Boris Johnson’s surprisingly easy election win. This has paved the way for a Brexit departure at the end of January. However, traders should be prepared for more swings from the pound early in 2020, as the transition period after Brexit promises to be uneasy and difficult. Already London and Brussels are arguing whether 11 months is enough time to conclude a new trade deal- the EU wants more time, but Prime Minister Johnson wants out of the EU as soon as possible.
GBP/USD is currently range-bound. On the upside, there is resistance at 1.3280. The pair is putting downward pressure on 1.3200. Below, we find support at 1.3150.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.33.
The projected lower bound is: 1.30.
The projected closing price is: 1.31.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 21 black candles for a net of 6 white 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 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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 64.3679. This is not an overbought or oversold reading. The last signal was a sell 0 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 55.34. 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 sell 13 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 46. This is not a topping or bottoming area. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.000 at 1.314. Volume was 99% below average (consolidating) and Bollinger Bands were 3% narrower than normal.
Open High Low Close Volume___
1.314 1.314 1.314 1.314 708
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.31 1.30 1.27
Volatility: 10 9 9
Volume: 72,202 94,906 120,445
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.
FOREX GBP= is currently 3.6% above its 200-period moving average and is in an upward trend. Volatility is high 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 3 periods.