British Pound: USD/GBP (GBP=X) BoE Could Go Either Way

British Pound: USD/GBP (GBP=X) BoE Could Go Either Way

British Pound: USD/GBP (GBP=X) BoE Could Go Either Way

GBP/USD is hovering at the symbolic 1.30 level, up 0.08% on the day. Traders should be prepared for some movement in the European session, as the Bank of England announces its rate decision.

BoE Could Go Either Way

Will he or won’t he? Mark Carney chairs his final meeting as Governor of the Bank of England, and analysts are split on whether the bank will lower the benchmark rate to 0.50% or maintain rates at 0.75%. Just hours before the rate announcement, there is a 45% likelihood that the bank will cut rates, a move which would likely send the pound downwards. Either side in the rate debate can point to economic data that would support its case. Inflation levels have been falling and CPI slipped to just 1.3% in December, well below the BoE inflation target of 2.0%. Retail sales were down by 1% in the three months to December, compared to the previous three months. However, the employment market remains strong, and manufacturing and services have shown some improvement.

Technical Analysis

The pair is testing support at the 1.30 line. Below, there is support at 1.2950, which has held firm since the last week in December. Above, the 50-EMA is close by at 1.3011, followed by resistance at 1.3050. The next resistance line is at the round number of 1.3100.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.33.

The projected lower bound is: 1.29.

The projected closing price is: 1.31.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX GBP=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 36.2099. This is not an overbought or oversold reading. The last signal was a sell 19 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 52.45. 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 32 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 24. This is not a topping or bottoming area. The last signal was a buy 7 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 sell 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.007 at 1.309. Volume was 7% above average (neutral) and Bollinger Bands were 59% narrower than normal.

Open     High      Low     Close     Volume___
1.302 1.311 1.298 1.309 109,704
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.31 1.31 1.27
Volatility: 7 9 9
Volume: 101,979 99,024 115,010

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 3.1% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 14 periods.

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