British Pound: USD/GBP (GBP=X) signs of hope for a deal breakthrough emerging

British Pound: USD/GBP (GBP=X) signs of hope for a deal breakthrough emerging

British Pound: USD/GBP (GBP=X) signs of hope for a deal breakthrough emerging

It’s not a “Super Thursday,” but it sure feels like one. The September Bank of England policy meeting produced the dually surprising yet unsurprising remark from BOE Governor Mark Carney that the Monetary Policy Committee may need to cut interest rates thanks to the uncertainty around the US-China trade war and the outcome of Brexit. Rates markets, however, are not convinced: there is only a 37% chance of a 25-bps rate cut through August 2020.

The more important news on the day was the recent development that UK Prime Minister Boris Johnson has submitted to the European Union a framework of a deal that would allow the UK to leave the EU on October 31, 2019 as planned. This may not be a false start either.

Signs of hope for a deal breakthrough emerged on Wednesday when European Commission President Jean-Claude Juncker said that “I had a meeting with Boris Johnson that was rather positive. I think we can have a deal…I don’t like the idea of no-deal because I think this would have catastrophic consequences.”

It would thus follow that: if the BOE is considering cutting interest rates due to Brexit uncertainty; and Brexit uncertainty is dropping thanks to positive commentary from European Commission President Juncker; then the BOE may not be incentivized to cut rates as soon as they were otherwise indicating this morning. In the current environment of the “race to the bottom” among G10 currencies’ central banks, this may help provide further scope for Sterling rates to recover.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1.27.

The projected lower bound is: 1.23.

The projected closing price is: 1.25.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black 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 80.7396. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 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 63.80. 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 26 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 110.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 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 26 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.000 at 1.253. Volume was 98% below average (consolidating) and Bollinger Bands were 38% wider than normal.

Open     High      Low     Close     Volume___
1.252 1.253 1.252 1.253 2,395
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.24 1.23 1.27
Volatility: 10 10 9
Volume: 107,091 116,231 146,433

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 1.7% below 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 19 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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