British Pound: USD/GBP (GBP=X) Faces a more Difficult Road

British Pound: USD/GBP (GBP=X) Faces a more Difficult Road

British Pound: USD/GBP (GBP=X) Faces a more Difficult Road

Reports out Thursday suggest Brexit talks between the EU and UK are close to breaking down, suggesting Prime Minster Theresa May’s Brexit deal will be shot down next week in what could amount to a substantial shift in sentiment for the British Pound.

“Backstop talks on verge of collapse,” says Tom Newton Dunn, Political Editor at The Sun, adding there will be a meeting in Brussels on Thursday “to discuss whether it’s even worth holding any further negotiations, as two sides so far apart”.

We would expect any suggestion that talks have broken down to be notably negative for Sterling.

Furthermore, The Sun reports plans for a weekend trip for Theresa May and EU Commission boss Jean-Claude Juncker to seal any new deal are “on ice”.

If the reports are accurate, and we tend to place a high regard on the reporting of Tom Newton Dunn, this suggests to us that May might not even be in a position to bring a vote to parliament next week, and we sense that the Prime Minister is running out of road. The odds of a General Election would spike substantially in the event of talks breaking down, and the British Pound has shown over recent years that it dislikes major votes, we are therefore cautious of the currency at this juncture.

The British Pound has been trending lower over recent days with traders increasingly wary that the UK will be unable to secure the kind of assurances required from Brussels to pass Prime Minister Theresa May’s Brexit deal.

Overall, the bias in prices is: Sideways.

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

The projected upper bound is: 1.33.

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 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 24 white candles and 24 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 17.7101. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 51.98. 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 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 -45. This is not a topping or bottoming area. The last signal was a sell 5 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 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.001 at 1.309. Volume was 100% below average (consolidating) and Bollinger Bands were 35% wider than normal.

Open High Low Close Volume___
1.308 1.309 1.308 1.309 334

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

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.30 1.30
Volatility: 9 10 10
Volume: 160,983 162,959 177,568

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 0.8% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 9 periods.

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