British Pound: USD/GBP (GBP=X) Falls Sharply Lower Ahead of US Retail Sales as the Dollar Dominates the Majors

British Pound: USD/GBP (GBP=X) Falls Sharply Lower Ahead of US Retail Sales as the Dollar Dominates the Majors

British Pound: USD/GBP (GBP=X) Falls Sharply Lower Ahead of US Retail Sales as the Dollar Dominates the Majors

GBP/USD briefly rose to a fresh one-month high yesterday but has given back the gain in early trading today, ahead of the US retail sales report.

The pair has been weighed by a strong dollar as the greenback has gained against all of its major counterparts. The trade-weighted dollar index was last seen trading at 99.55, wiping out losses from the early week and showing a small gain.

It remains to be seen whether the greenback can hold on to its early day gains. Investors are bracing for today’s US retail sales report which is expected to show a staggering 8% decline in sales for March.

The report will be the first in a series of reports that will shine a light on how badly the economy performed last month as a result of the Coronavirus.

Weekly US jobless claims figures have already hinted that the labor market has deteriorated rapidly as the past few reports have shown claims several multiples higher than ever seen before.

The break above recent highs yesterday likely drew buyers. With the pair currently falling back towards the breakout point ahead of the US retail sales report, there is some downside risk.

GBP/USD bulls might look to cover their positions ahead of the report as the volatility that it accompanies it can vary a great degree. After all, such a sharp one-month decline in sales is unprecedented.

This could keep pressure on the pair ahead of the report. The reaction once the report is released stands to set the tone for GBP/USD.

A weak dollar reaction will tend to reignite the already bullish trend for GBP/USD. In such a scenario, Sterling stands to outperform some of its major counterparts.

On the other hand, if the dollar extends higher following the report, GBP/USD will invalidate the bullish signal from yesterday after it broke above recent highs. This stands to trigger stops from recent bullish positioning and opens up the potential for a downside move.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.29.

The projected lower bound is: 1.21.

The projected closing price is: 1.25.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

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 62.8205. This is not an overbought or oversold reading. The last signal was a sell 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 52.82. 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 17 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 70. This is not a topping or bottoming area. The last signal was a sell 0 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 14 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.003 at 1.248. Volume was 71% below average (consolidating) and Bollinger Bands were 67% wider than normal.

Open High Low Close Volume___
1.251 1.253 1.246 1.248 32,757
Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.24 1.26 1.27
Volatility: 12 21 14
Volume: 115,140 125,711 112,693

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 1.4% below its 200-period moving average and is in an upward 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 moderate flows of volume into GBP= (mildly bullish). Our trend forecasting oscillators are currently bullish on GBP= and have had this outlook for the last 5 periods.

We invite you to try out any MetaStock product (including Add-Ons) for 30 days. If you are not convinced that it helps you make more accurate, educated trading decisions, just return it to us within the 30 days for a refund of the purchase price. It’s that simple. This policy does not apply to subscriptions.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

Latest posts by HEFFX Australia (see all)