British Pound: USD/GBP (GBP=X) U.K. Inflation and Fed Meeting ahead

British Pound: USD/GBP (GBP=X) U.K. Inflation and Fed Meeting ahead

There are no major indicators on the schedule, so investors are casting an eye ahead towards Wednesday, with key events on both sides of the pond. The U.K. will release the August consumer inflation report. Recent CPI releases have been around the 2.0% level, which is the Bank of England’s inflation target. However, inflation is expected to drop to 1.8% in August, and if CPI falls below this level, the pound could lose ground. As well, investors will be keeping a close eye on the Federal Reserve, which will set the benchmark rate and release a rate statement. Any hints about further rate cuts in 2019 could weigh on the U.S. dollar.

Technical Analysis

Since the start of the week, GBP/USD has hovered close to resistance at 1.2420. However, the pair has tested this line in the North American session. Will we see a clean break past this stubborn line? The pound remains in an area of resistance, with another resistance line at 1.2510. On the downside, there is resistance at 1.2380. This line is not particularly strong and is vulnerable if the pound coughs up Tuesday’s gains.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.27.

The projected lower bound is: 1.23.

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 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

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 85.0268. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 1 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 63.50. 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 23 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 122.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 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 buy 23 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.007 at 1.250. Volume was 7% below average (neutral) and Bollinger Bands were 19% wider than normal.

Open     High      Low     Close     Volume___
1.243 1.253 1.239 1.250 114,899
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.24 1.23 1.27
Volatility: 12 10 9
Volume: 124,317 119,160 148,514

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 1.9% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 16 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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