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British Pound: USD/GBP (GBP=X) Slightly Weaker Tone Short-Term

British Pound: USD/GBP (GBP=X) Slightly Weaker Tone Short-Term

There was a positive tone to risk appetite yesterday. The major equity indices managed to register gains. At the closing bell on Wall Street last night, the S&P 500 was up 1.7% on the day.

Meanwhile, the action on currency markets over the past 24 hours has been confined to comparatively tight ranges. Of the limited moves to register, sterling has been slightly softer, whereas the euro has been holding a slightly firmer tone.

In terms of yesterday’s key macro calendar items, as expected, the Fed minutes were a non event for the greenback. In the UK, BoE Governor Bailey was before the Treasury Select Committee. On the issue of the potential for negative rates, Governor Bailey commented that the BoE was keeping its options open on this front. Apparently, in this context, the United Kingdom issued a bond (3-year gilt) yesterday, with a negative yield for the first time. This backdrop, along with headlines in respect to UK fiscal policy, coincided with some mild downward pressure on the Sterling.

As the European session opens this morning EUR/USD is trading in the higher half of $1.09-1.10, having traded as high as $1.099 yesterday. Meantime, EUR/GBP is changing hands up near to 90p. The marginally weaker sterling tone is also evident in GBP/USD starting today just under the $1.22 level.

Today, a key focus for markets will be the flash PMIs for May due out in the United Kingdom, Eurozone and United States of America. It’s anticipated that these surveys will register some improvement, reflecting the gradual easing of Covid19 related restrictions. Meanwhile, the most recent set of US weekly jobless claims will be looked to for further signs of a moderation in the pace of lay-offs. Overall, today’s data might provide some modest support to sentiment.

Euro/US Dollar Exchange Rate

Euro/Sterling Exchange Rate

Sterling/US Dollar Exchange Rate

Today’s Forex Rates

FX Polls

Economic Events

Shayne Heffernan Trade Idea

“If we were to turn around and break higher than the highs from both the Tuesday and Wednesday session, then the market is probably going to go up towards the 50 day EMA. A break above that level in fact would be a very optimistic sign however right now it looks as if the GBP is making an attempt to break down lower, as we have had a sudden shot to the downside, a significant bounce, and now we are trying to figure out what to do with the Pound. We are pressing the previous support level from the previous consolidation area, and that suggests that there ought to be significant resistance as we have seen in the last few days.” Shayne Heffernan PhD in Economics

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.24.

The projected upper bound is: 1.26.

The projected lower bound is: 1.19.

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 2 white candles and 7 black candles for a net of 5 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 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 67.4174. This is not an overbought or oversold reading. The last signal was a buy 3 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 42.60. 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 43 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 -55. This is not a topping or bottoming area. The last signal was a buy 3 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 12 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.002 at 1.221. Volume was 73% below average (consolidating) and Bollinger Bands were 31% narrower than normal.

Open        High       Low       Close        Volume
1.222       1.224      1.220     1.221        32,587
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bearish
Long Term:         Bearish
Moving Averages: 10-period      50-period        200-period
Close:           1.22           1.23             1.27
Volatility:      9              19               14
Volume:          116,746        128,133          113,507

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 3.6% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 7 periods.

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