British Pound: USD/GBP (GBP=X) weak UK data and Brexit uncertainty weigh
The fresh forward-looking purchasing managers’ index adds insult to injury for the pound. Sterling had already been suffering from growing uncertainty around Brexit after parliament was unable to vote on a motion that could have blocked a no-deal Brexit. John Bercow, the speaker of the House of Commons, has prevented a vote that would suspend government spending in case the government would push a no-deal exit from the EU.
Foreign secretary Jeremy Hunt – who trails Boris Johnson in the Conservative Party’s leadership contest – has set September 30th as the deadline to finalize a new deal with the EU on Brexit. The short timeframe concerns markets. Johnson previously said that the UK must leave by October 31st “do or die”. Both candidates’ positions are weighing on the pound – which reacts adversely to growing chances of a hard Brexit.
The previous PMI for the manufacturing has also fallen short of forecasts – only 48 points – also below the 50-point threshold that separates expansion from contraction.
On the other side of the Atlantic, the manufacturing sector is still growing according to the ISM Manufacturing PMI – scoring 51.7 points in June – beating expectations. Moreover, the US dollar continues enjoying diminishing expectations for a deep rate cut by the central bank.
John Williams, President of the New York branch of the Federal Bank, will speak later today and may shed some light on the Fed’s current thinking.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1.27.
The projected lower bound is: 1.25.
The projected closing price is: 1.26.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black 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 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 6.3594. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 39.38. 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 -72. This is not a topping or bottoming area. The last signal was a buy 10 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 sell 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.000 at 1.259. Volume was 98% below average (consolidating) and Bollinger Bands were 34% narrower than normal.
Open High Low Close Volume___
1.259 1.260 1.259 1.259 2,286
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: 5 7 10
Volume: 111,006 133,103 169,856
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 2.4% 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 5 periods.