British Pound: USD/GBP (GBP=X) BoE cuts growth forecasts but Sterling re-traces the sell-off
A tough week for trying to value Sterling looking forward with a mildly dovish Bank of England Report having only a short-term negative effect on GBP, while the Irish backstop problem becomes seemingly even more entrenched. We do not like changing forecasts on a regular basis but after being Sterling positive for only a couple of weeks, we now downgrade to neutral until the Brexit fog clears.
The Bank of England ‘Super Thursday’ saw the central bank downgrade growth expectations for 2019 again, this time to 1.2% from 1.7% and trimming interest rate expectations to just one 0.25% hike by the end of 2020.The BoE based their lower growth forecast on weaker overseas economic activity and ‘the greater effects from Brexit uncertainties at home’.
These comments sent GBPUSD spinning around one cent lower, but this fall was quickly erased when comments came out from Brussels that further Brexit discussions will take place between PM May and European Commission President Juncker before the end of February. Later, comments from Donald Tusk saying that there will be a ‘special place in hell’ for politicians who pushed for Brexit without a delivery plan, were brushed off , despite gathering reams of headlines. GBPUSD was also under pressure all week from a resurgent US dollar which touched a fresh five-week high. EURGBP, perhaps a better Brexit barometer, is ending the week fractionally lower.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.29.
The projected upper bound is: 1.32.
The projected lower bound is: 1.27.
The projected closing price is: 1.30.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 25 white candles and 25 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 27.4302. This is not an overbought or oversold reading. The last signal was a buy 0 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 50.31. 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 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 -89. This is not a topping or bottoming area. The last signal was a sell 8 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 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.001 at 1.295. Volume was 15% below average (neutral) and Bollinger Bands were 3% narrower than normal.
Open High Low Close Volume___
1.295 1.298 1.292 1.295 158,507
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.30 1.28 1.30
Volatility: 6 10 10
Volume: 169,156 176,892 177,721
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 0.6% below its 200-period moving average and is in an upward trend. Volatility is low 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 28 periods.