British Pound: USD/GBP (GBP=X) Risks To Downside

British Pound: USD/GBP (GBP=X) Risks To Downside

British Pound: USD/GBP (GBP=X) Risks To Downside

The Pound US Dollar (GBP/USD) exchange rate clinched a second week of appreciation, spurred higher by a wave of Brexit-based optimism.

Against the US Dollar, the £ cross gained 1.15% and was seen edging higher into Monday’s session, trading at $1.32416 at the time of writing.

It’s a quiet session in terms of economic data with the relatively low-impact UK construction PMI due – expected to edge lower but remain above 50 at 50.5 from a previous 50.6.

For the Greenback, construction spending data is expected to show a slackening in the pace of spending within the sector with a forecast of just 0.2%, down from 0.8%.

The GBP remains Brexit-focused – MPs are expected to participate in a series of votes from March 12th – 14th to determine the UK’s route out of the European Union. With that in mind, this week is likely to see UK lawmakers canvassing for support for their respective positions.

Pound traders will be looking ahead to Monday’s release of the UK Markit construction PMI figures for February, which, however, are expected to decrease.

Tuesday, meanwhile, will the publication of UK Markit services PMI figures for February, which are expected to increase, and may provide the Pound with some further uplift.

USD traders will be looking ahead to Tuesday’s publication of the US ISM non-manufacturing PMI figures for February, which are inspected to improve.

Wednesday, meanwhile will see the release of the US trade balance figures for December followed by the US new home sales figures for January, and with any signs of an increase in either this could prove ‘Greenback’-positive.

Thursday will see the publication of the US nonfarm productivity figures for the fourth-quarter.

Sterling traders, however, will be looking ahead to Friday’s printing of the UK industrial production figures for January.

The GBP/USD exchange rate is likely to remain fixated on Brexit developments next week, and with any signs of a possible extension of Article 50, or a conclusion of the US-China trade talks, it is likely we’ll see the Pound rise further.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.35.

The projected lower bound is: 1.31.

The projected closing price is: 1.33.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white 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.

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 64.5025. This is not an overbought or oversold reading. The last signal was a sell 1 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 63.93. 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 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 90. This is not a topping or bottoming area. The last signal was a sell 1 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 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.004 at 1.324. Volume was 64% below average (consolidating) and Bollinger Bands were 38% wider than normal.

Open High Low Close Volume___
1.323 1.327 1.322 1.324 65,146

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.29 1.30
Volatility: 10 10 10
Volume: 166,713 162,783 178,245

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 2.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 5 periods.

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