British Pound: USD/GBP (GBP=X) sees tepid gains, to remain heavy
The latest UK labour market data has beaten expectations, and should provide Sterling with some short-term support but we remain of the view any strength in the currency should ultimately remain limited in nature.
According to the ONS, Average Earnings – excluding bonuses – read at 3.9% in June, ahead of economist forecasts for a reading of 3.8% and the previous month’s reading of 3.6%.
This is an 11-year high.
The Average Earnings Index – with bonuses included – for June read at 3.7%, in line with economist forecasts but above the previous month’s 3.5% which was itself revised higher.
And, the better-than-expected numbers extended to the employment statistics where it was shown the UK workforce grew 115K on a the three-month-on-three-month basis in June, markets had only expected growth of 65K.
“While much of that was part-time employment, it is encouraging that firms have retained their workers, suggesting they expect activity to pick up again following the Brexit hangover in Q2,” says Andrew Wishart, UK Economist with Capital Economics.
The UK unemployment rate nudged up unexpectedly to 3.9% in (the three months) to June. Consensushad been for a steady rate of 3.8% for the fourth consecutive month.
When it comes to currency markets, deviation from expectations move a currency, and the best on expectations should therefore be supportive of Sterling.
We are seeing some gains in the Pound following the release, with the Pound-to-Euro exchange rate trading at 1.0785, the day’s low is at 1.0756. The Pound-to-Dollar exchange rate trading at 1.2067, the day’s low is at 1.2042.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1.24.
The projected upper bound is: 1.22.
The projected lower bound is: 1.19.
The projected closing price is: 1.20.
A black body occurred (because prices closed lower 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 20 white candles and 30 black candles for a net of 10 black candles.
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 20.3569. This is not an overbought or oversold reading. The last signal was a buy 6 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 28.42. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 5 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 -92. This is not a topping or bottoming area. The last signal was a buy 6 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 sell 12 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.002 at 1.206. Volume was 14% below average (neutral) and Bollinger Bands were 87% wider than normal.
Open High Low Close Volume___
1.207 1.210 1.204 1.206 114,325
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.21 1.25 1.28
Volatility: 6 8 10
Volume: 120,589 120,930 159,913
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 5.9% 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 25 periods. Our momentum oscillator is currently indicating that GBP= is currently in an oversold condition.
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