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British Pound: USD/GBP (GBP=X) tumbled due to fresh comments from Federal Reserve officials

British Pound: USD/GBP (GBP=X) tumbled due to fresh comments from Federal Reserve officials

After hitting its best levels in weeks yesterday, the British Pound to US Dollar (GBP/USD) exchange rate tumbled due to fresh comments from Federal Reserve officials. However, the US Dollar’s appeal was limited as the Fed remained dovish overall, and investors were hesitant to make any big moves on the US currency ahead of upcoming major US ecostats and Friday’s anticipated G20 Summit. 

US Dollar weakness has been one of the most major causes of forex movement this month. Last week, GBP/USD saw solid strong gains from 1.2589 to close the week around the level of 1.2732. 

At the beginning of this week, GBP/USD continued to trend with an upside bias and even briefly touched on a fortnight high of 1.2769 yesterday. 

After that though, fresh comments from Federal Reserve officials led to a limited rebound in US Dollar demand. At the time of writing on Wednesday afternoon, GBP/USD trended closer to this week’s lowest levels of 1.2666. 

GBP Exchange Rates Kept under Pressure as No-Deal Brexit Fears Persist

Investors have been hesitant to buy the Pound much in recent weeks, as the UK Conservative Party leadership contest appears likely to lead to a hard Brexit supporter succeeding Theresa May as Prime Minister. 

Both remaining candidates, Boris Johnson and Jeremy Hunt, support a harder Brexit than outgoing PM Theresa May did. 

The frontrunner Boris Johnson especially advocates a harder Brexit and has said that he would rather take Britain out of the EU with no deal than delay the Brexit process again. 

With Johnson’s leadership seeming increasingly likely, no-deal Brexit fears have revived full force and the Pound’s appeal has weakened. 

Analysts remain uncertain as to how the Brexit process will unfold and how Parliament will tackle the next Prime Minister’s Brexit plans. According to Derek Halpenny, European Head of Global Markets Research at MUFG Bank London: 

‘We are heading for a showdown – a no-deal Brexit; a general election; or a second referendum, 

The Pound is set to come under renewed downward pressure over the coming weeks with no deal still very much under-priced.’

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.28.

The projected lower bound is: 1.25.

The projected closing price is: 1.27.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.

An inverted hammer occurred. If this occurs during a downtrend it implies a reversal. Look for a confirmation of the reversal on the bar.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend the long upper shadow indicates that the bears are gaining control and a top may occur.

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 48.6989. 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 47.74. 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 19 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 31. This is not a topping or bottoming area. The last signal was a buy 6 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 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed unchanged at 1.269. Volume was 99% below average (consolidating) and Bollinger Bands were 41% narrower than normal.

Open High Low Close Volume___
1.268 1.270 1.268 1.269 1,798

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 1.27 1.28 1.29
Volatility: 8 7 10
Volume: 110,799 136,201 171,151

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 1.8% below 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 moderate flows of volume into GBP= (mildly bullish). Our trend forecasting oscillators are currently bullish on GBP= and have had this outlook for the last 1 periods.

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