British Pound: USD/GBP (GBP=X) rises as US-China tensions escalate

British Pound: USD/GBP (GBP=X) rises as US-China tensions escalate

British Pound: USD/GBP (GBP=X) rises as US-China tensions escalate

The pound has edged up against the US dollar this morning, taking the pairing to $1.218. On Tuesday morning, the European Union stated that there will be no further Brexit talks as long as the UK government insists on making changes to Theresa May’s withdrawal agreement. Negotiators stated that suggested changes, such as scrapping the Irish backstop, were unacceptable.

At the start of the week, the Chinese yuan fell below the seven-per-dollar level for the first time since 2008, prompting US Treasury Secretary Steven Mnuchin to accuse Beijing of manipulating the yuan “to gain an unfair competitive advantage in international trade.”

Tensions may continue to escalate, and DBS Group Research stated in a note:

“Naming China a currency manipulator could open the door for US tariffs to eventually increase to more than 25 percent on Chinese goods.

“Apart from naming China a currency manipulator, Trump’s election campaign pledge was to lift import tariffs to 45 percent on China.”

Yesterday’s US ISM non-manufacturing report also put pressure on the US dollar by coming in at 53.7 rather than 55.5. 

With no influential US data due out until the end of the week the GBP/USD exchange rate will remain reactive to the latest Brexit and trade-related headlines.   

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.25.

The projected upper bound is: 1.23.

The projected lower bound is: 1.20.

The projected closing price is: 1.22.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 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 50.8400. This is not an overbought or oversold reading. The last signal was a buy 2 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 30.91. 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 1 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 -60. This is not a topping or bottoming area. The last signal was a buy 2 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 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed unchanged at 1.217. Volume was 98% below average (consolidating) and Bollinger Bands were 84% wider than normal.

Open     High      Low     Close     Volume___
1.217 1.217 1.216 1.217 2,360
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.22 1.25 1.28
Volatility: 8 8 10
Volume: 108,987 120,989 160,848

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 5.2% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 21 periods.

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