British Pound: USD/GBP (GBP=X) Won’t be Supported by Dovish Fed Speak this Week
If there is a dominant theme in the FX market it is that the British pound is weak and that the markets think the Fed will ease policy later this month.
The latter has been underpinning GBP/USD as it has put some pressure on the greenback. At the same time, Sterling is hovering near yearly lows versus the greenback and is the only major currency to do so.
Last week, several FOMC members revealed that they were on board with cutting rates next week. There was one notable exception. Fed member Rosengren said he’d rather wait, which sent the dollar sharply higher and also put pressure on equities.
As a result, GBP/USD is once again below the psychological 1.2500 handle.
Brexit developments have been weighing on the pair, and unless there is a shift in sentiment regarding the EU exit, we could see GBP/USD declining to fresh yearly lows.
The rationale behind this is that the Fed has now entered a blackout period. This means there won’t be headline news of Fed members discussing monetary policy which was a key driver for dollar weakness in the past week.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 1.27.
The projected upper bound is: 1.26.
The projected lower bound is: 1.23.
The projected closing price is: 1.25.
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 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 55.6756. This is not an overbought or oversold reading. The last signal was a buy 9 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 41.85. 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 9 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 -57. This is not a topping or bottoming area. The last signal was a buy 3 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.000 at 1.247. Volume was 97% below average (consolidating) and Bollinger Bands were 4% narrower than normal.
Open High Low Close Volume___
1.247 1.248 1.247 1.247 4,708
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.25 1.26 1.29
Volatility: 9 7 10
Volume: 104,924 125,252 164,888
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 3.0% below its 200-period moving average and is in an downward trend. Volatility is 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 10 periods.