British Pound: USD/GBP (GBP=X) focus is on manufacturing releases
GBP/USD has posted is unchanged in the Monday session. Currently, GBP/USD is trading at 1.2645, up 0.11% on the day. On the fundamentals front, the focus is on manufacturing releases. British Manufacturing PMI slowed to 49.4, missing expectations. Later on, the U.K. releases BRC Retail Sales Monitor, with an estimate of 0.9%. In the U.S., ISM Manufacturing PMI dropped to 52.1, short of the estimate of 53.0. On Tuesday, the U.K. releases Construction PMI.
It was a sour start to the week for British fundamentals, as manufacturing PMI dipped below the 50-level, which separates expansion from contraction. The PMI dropped to 49.4, marking the first contraction since July 2016. Although the pound has held its own on Monday, the unexpected contraction could unnerve investors and weigh on the pound. Manufacturing news from the U.S. also disappointed, as ISM Manufacturing PMI slowed to 52.1, down from 53.0 a month earlier. Global demand has fallen off trade tensions, and unless this situation improves, manufacturing sectors across the globe will remain under strong pressure.
The U.S. economy continues to perform well, with first-quarter growth above the 3% level. Second estimate GDP posted a gain of 3.1%, matching the estimate. This was just shy of the initial estimate in April, which came in at 3.1%. The U.S. economy is firing on all cylinders, despite the nasty trade war with China, which has escalated in recent weeks. U.S. officials, including President Trump, had announced that substantial progress had been made, and it seemed that a trade deal was just around the corner. However, Trump shocked the markets by slapping further tariffs on China, which led to counter-tariffs against U.S. products. China has reacted angrily to U.S. trade sanctions on Huawei, a giant Chinese telecom company. If there are no signs of progress in the U.S.-China trade war, investors could opt for the safety of the greenback, which could hurt the British pound.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 1.28.
The projected upper bound is: 1.28.
The projected lower bound is: 1.25.
The projected closing price is: 1.27.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 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 white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 62.8260. 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 35.70. 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 2 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 -29. This is not a topping or bottoming area. The last signal was a buy 2 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 buy 0 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.000 at 1.267. Volume was 95% below average (consolidating) and Bollinger Bands were 31% wider than normal.
Open High Low Close Volume___
1.266 1.268 1.265 1.267 7,791
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.27 1.29 1.29
Volatility: 5 7 10
Volume: 131,329 151,016 174,536
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 2.2% below its 200-period moving average and is in an downward 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 out of GBP= (mildly bearish). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 14 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.