British Pound: USD/GBP (GBP=X) Marches Higher in its Recovery

British Pound: USD/GBP (GBP=X) Marches Higher in its Recovery

British Pound: USD/GBP (GBP=X) Marches Higher in its Recovery

The British pound was one of the strongest major currencies in 2019, advancing roughly 4% against the greenback this year. The Canadian dollar is on pace for the top-performing major currency spot in 2019. It has outpaced Sterling by just a fraction of a percent.

Much of the price fluctuation in GBP/USD this year is attributed to Brexit. Or more specifically, the market repricing of the potential of a no-deal Brexit.

Investor became confident in September that the UK will leave the EU with a deal after Johnson started making progress negotiating a divorce agreement with the EU. The currency pair currently trades about 10% higher from the low printed at that time.

The market tone was much different earlier in the year as Johnson’s constant threats of leaving without a deal put Sterling under relentless pressure. GBP/USD declined before Johnson became PM in anticipation and continued to decline shortly after he took office.

The pair once again came under pressure after the most recent election has Johnson once again brought up the potential of a no-deal exit. The pair has been recovering, however, for about a week, helped by a broadly weaker dollar.

Technical Analysis

GBP/USD was last seen attacking resistance at 1.3145 which held the pair lower yesterday. The pair is showing strength and the dollar is broadly weaker in the early day.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1.34.

The projected lower bound is: 1.31.

The projected closing price is: 1.33.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 22 black candles for a net of 4 white candles.

A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with FOREX GBP=) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.

During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.

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 89.7763. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 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 64.17. 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 11 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 84. This is not a topping or bottoming area. The last signal was a buy 4 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 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.001 at 1.325. Volume was 93% below average (consolidating) and Bollinger Bands were 3% narrower than normal.

Open     High      Low     Close     Volume___
1.326 1.327 1.324 1.325 7,699
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.31 1.30 1.27
Volatility: 9 9 9
Volume: 84,066 97,644 122,000

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 4.4% above its 200-period moving average and is in an upward trend. Volatility is high 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 1 periods.

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