British Pound: USD/GBP (GBP=X) losing its gains in response to weak UK data

British Pound: USD/GBP (GBP=X) losing its gains in response to weak UK data

British Pound: USD/GBP (GBP=X) losing its gains in response to weak UK data

The pound trades almost exclusively but it has been unable to ignore horrible figures. The UK economy shrank by 0.4% in April, worse than expected and indicating a hangover in the economy after businesses stockpiled ahead of the original Brexit data – March 29th.

Manufacturing output dropped by a whopping 3.9% on a monthly basis and 0.8% year on year. Only the trade deficit beat expectations with -12.113 billion pounds.

Overall, Brexit seems to be taking its toll on the economy without even happening – and leaders will now have their say.

Conservative contest

Boris Johnson has begun his march to 10 Downing Street, but he may face fierce competition. The Conservative Party’s leadership contest has begun. By the end of the day, we will have the full list of contenders and a marginally better picture of their odds. The contest’s rules require all candidates to have minimal support of at least eight MPs.

Former foreign secretary Boris Johnson has stepped up his campaign by offering a tax cut to wealthy pensioners – seemingly appealing to the party’s membership. More importantly for markets, Johnson remains adamant that the UK will leave on October 31st – deal or no deal. The current foreign secretary Jeremy Hunt does not want to stick to a rigid timeline while former Brexit secretary Dominic Raab has reportedly suggested bypassing parliament to ram through a hard Brexit – angering many.

Other noteworthy names are the former leader of the House of Commons Andrea Leadsom and environment minister Michael Gove – whose candidacy has lost momentum after he admitted to using cocaine in the past.

It is important to note that what candidates say during the campaign does not necessarily imply her or his actions in Downing Street. Nevertheless, markets will move in response to the contenders’ words and odds.

GBP/USD has enjoyed the weakness of the US Dollar that tumbled in response to Friday’s weak jobs report. The US gained only 75K positions in May, far fewer than expected and wage growth slowed down – indicating a higher chance of a rate cut.

The US and Mexico have reached an according to on stemming migrant flows into the US, prompting President Donald Trump to suspend the planned tariffs and cheering markets.

With few figures due later today, the focus remains on politics – especially the UK leadership contest.

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: 1.26.

The projected closing price is: 1.27.

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 19 white candles and 31 black candles for a net of 12 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 69.3300. This is not an overbought or oversold reading. The last signal was a buy 11 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 41.11. 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 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 57. 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 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.004 at 1.269. Volume was 28% below average (neutral) and Bollinger Bands were 30% narrower than normal.

Open High Low Close Volume___
1.273 1.275 1.265 1.269 115,754

Technical Outlook
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: 4 6 10
Volume: 140,181 149,546 174,208

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 1.9% 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 18 periods.

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