British Pound: USD/GBP (GBP=X) Brexit now returns to the agenda with expected volatility

British Pound: USD/GBP (GBP=X) Brexit now returns to the agenda with expected volatility

British Pound: USD/GBP (GBP=X) Brexit now returns to the agenda with expected volatility

After the Easter recess Brexit now returns to the agenda with another round of volatility to be expected in these coming weeks. The pound to dollar exchange rate has struggled to gain momentum with rates falling below 1.30 for the GBP/USD pair. Data from the US has proven resilient despite the Federal Reserve looking to pause on any further interest rate hikes throughout 2019.

Industrial production data from last week saw a small decline on the month but still showed growth over the course of the year helping lend support to an already buoyant US dollar. The US dollar is maintaining the higher ground as a safe haven currency whilst other economies globally fear an economic downturn. Many central banks are now openly considering interest rate cuts which only highlights the reasoning why investors are moving to the safety of the dollar.

Brexit talks resume after the Easter break

Brexit will once again be the main talking point as far as GBP to USD rates are concerned with talks still ongoing between the Conservative and Labour parties. Where Brexit goes from here will very much depend on whether a compromise can be reached which will revolve around the workings of a customs union. To date the government has rejected any proposal of a customs union which would keep freedom of movement between Britain and the EU. The government has made clear it wants to avoid having to contest the European elections although preparations are firmly in place with polling cards having already been sent out to the public.

If a compromise solution is not found in these coming weeks then the government will need to put forward MEP’s to campaign. The Brexit Party headed up by Nigel Farage could see considerable support in the upcoming European elections to be held 23rd May and could see a twist in both British and European politics. In these unusual times in British politics any developments in these elections could result in major market reaction for GBP vs USD.

Economic data for the UK is light this week so focus will largely centre on British politics for the UK. There is a raft of US date which should offer some insight as the strength of the US property market focusing on mortgages and house prices as well as manufacturing activity in the US.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.31.

The projected lower bound is: 1.27.

The projected closing price is: 1.29.

Candlesticks

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 20 white candles and 28 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.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 6.6338. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 32 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 36.72. 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 39 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 -159.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 12 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 24 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.000 at 1.293. Volume was 96% below average (consolidating) and Bollinger Bands were 42% narrower than normal.

Open High Low Close Volume___
1.294 1.295 1.293 1.293 6,027

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 1.30 1.31 1.30
Volatility: 4 10 10
Volume: 143,273 171,068 178,354

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 0.2% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 16 periods.

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