British Pound: USD/GBP (GBP=X) Analysts remain sceptical Sterling’s gains will be enduring

British Pound: USD/GBP (GBP=X) Analysts remain sceptical Sterling’s gains will be enduring

British Pound: USD/GBP (GBP=X) Analysts remain sceptical Sterling’s gains will be enduring

Pound Sterling rallied against the Euro, U.S. Dollar and other major currencies on Thursday after French President Emmanuel Macron said the Withdrawal Agreement can be amended to allow the UK to leave the European Union with a deal.

Gains accelerated in the London afternoon session following comments by German Chancellor Angela Merkel in the Hague in which she suggested stated a solution to the Irish border issue could be found before the October 31 Brexit deadline.

“We can find a solution to the backstop by October 31…we can work on finding a regime that keeps the Good Friday Agreement and also ensures the integrity of the single market,” said Merkel.

Macron’s suggestion that the backstop can be tweaked is however arguably the more important communication of the day as it would appear to be the first time an EU leader has deviated from the long-held line that the Withdrawal Agreement cannot be reopened. 

“It is just what Michel Barnier has negotiated can be amended while complying with the integrity of the single market and the two goals I mentioned, then we can find a solution,” Macron said during a visit by UK Prime Minister Boris Johnson to Paris.

The suggestion from Macron is Barnier can find a solution “without totally reshuffling the Withdrawal Agreement”.

“We should all together be able to find something smart within 30 days on both sides if there is goodwill on both sides and I believe there is,” said Macron.

Macron also repeated the suggestion made by Germany’s Angela Merkel the day prior that a solution to the Irish border must be found in 30 days, giving rise to fresh hopes that a Brexit deal can yet be clinched by the UK and EU. “We will not find a new Withdrawal Agreement within 30 days that will be very different from the existing one.”

Following the comments, the Pound-to-Euro exchange rate was quoted at 1.1038, a new three-week high; this week’s low is down at 1.0888. The Pound-to-Dollar exchange rate is quoted at 1.2240, this week’s low is at 1.2065.

“Sterling continued to find buyers on the dip. Traders appeared to be comforted by the positive tone in today’s joint press conference from both UK PM Johnson and French President Macron regarding Brexit,” says Erik Bregar, Director, Head of FX Strategy at Exchange Bank of Canada.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 1.24.

The projected lower bound is: 1.21.

The projected closing price is: 1.22.

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 23 white candles and 27 black candles for a net of 4 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 83.2423. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 14 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 52.02. 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 6 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 202.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 14 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 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.225. Volume was 98% below average (consolidating) and Bollinger Bands were 40% narrower than normal.

Open     High      Low     Close     Volume___
1.225 1.227 1.225 1.225 2,682
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.21 1.24 1.28
Volatility: 7 8 9
Volume: 103,764 115,232 155,327

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 4.1% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 33 periods.

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