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British Pound: USD/GBP (GBP=X) Dollar softer, sterling firmer amid risk-on mood

British Pound: USD/GBP (GBP=X) Dollar softer, sterling firmer amid risk-on mood

The upbeat tone to investor sentiment continued yesterday as United States and UK markets came back from their long weekend. It seems market participants are focusing on the positives, regarding economies beginning to reopen, despite the still difficult and uncertain economic outlook.

This was mirrored in all of the main equity indices registering gains on the day. The euro Stoxx 50 was up around 1%, and this followed a rise of over 2% on Monday. Meanwhile, at the closing bell on Wall Street last night, the S&P 500 was up 1.2%. Overnight, the Nikkei also rose, with a 0.7% gain. On the currency front, amid the ‘risk on’ mood, the dollar has continued to soften somewhat over the past 24 hours. At the same time, sterling has been holding a firmer tone since yesterday’s open.

In level terms, the combination of a softer dollar and firmer sterling sees GBP/USD open this morning up in $1.23 territory. Meanwhile, the EUR/GBP pair starts the day below the 89p threshold.

Elsewhere, EUR/USD has edged higher into the upper half of the $1.09-1.10 trading band.

Today, there’s a quiet look to the data schedule. The publication of the european Commission’s proposal for the EU Recovery Fund are going to be of some interest, but euro impact might be limited.

The only other item of note is the release of the Fed’s Beige Book (after the close in Europe). However, it’s unlikely to generate any reaction in the dollar. Instead the action, if any, amongst the main FX pairs may be directed from the tone to investor sentiment.

Euro/US Dollar Exchange Rate

Euro/Sterling Exchange Rate

Sterling/US Dollar Exchange Rate

Sterling/Euro Exchange Rate

Today’s Forex Rates

GBP FX Polls

Economic Events

Shayne Heffernan Trade Idea

GBP/USD has breached the key resistance at 1.2250 as well as the 20 EMA and is trying to settle back into the previous range between 1.2250 and 1.2650.

The 50 EMA at 1.2350 serves as the first material resistance level for GBP/USD. It has already been tested and proved its strength. In case GBP/USD manages to get above the 50 EMA, it will gain additional upside momentum and head towards the next resistance level at 1.2450.

On the support side, the previous resistance level at 1.2250 will become the new support for GBP/USD. In addition, the 20 EMA is located in the nearby, creating a support area above 1.2250.

In case GBP/USD settles below the support at 1.2250, it will gain downside momentum and head towards the next support level at 1.2170.” Shayne Heffernan PhD in Economics

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.24.

The projected upper bound is: 1.26.

The projected lower bound is: 1.20.

The projected closing price is: 1.23.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white 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 58.3335. This is not an overbought or oversold reading. The last signal was a buy 7 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 46.97. 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 47 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 30. 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 buy 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed unchanged at 1.225. Volume was 72% below average (consolidating) and Bollinger Bands were 43% narrower than normal.

Open     High      Low      Close      Volume
1.226    1.228     1.225    1.225      34,114
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bearish
Long Term:         Bearish
Moving Averages: 10-period      50-period        200-period
Close:           1.22           1.23             1.27
Volatility:      12             15               14
Volume:          112,521        126,260          113,642

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 3.3% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.

Our volume indicators reflect moderate flows of volume out of GBP= (mildly bearish). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 11 periods.

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