British Pound: USD/GBP (GBP=X) UK Election to Drive Volatility to the Pound

British Pound: USD/GBP (GBP=X) UK Election to Drive Volatility to the Pound

British Pound: USD/GBP (GBP=X) UK Election to Drive Volatility to the Pound

With the election now only a few days away, volatility stands to rise for the pound to dollar exchange rate.

Thursday’s election will ultimately determine how things will evolve with Brexit. UK PM Boris Johnson wants to push through the already negotiated deal with the EU and intends to do so if he wins a majority. The Labour party wants to renegotiate the deal and let UK citizens vote on it.

The outcome of the election will tend to have a major impact on the economy. The Bank of England has expressed concerns about declining business investments and the overall state of the economy. A further delay in the EU exit would exacerbate these issues.

Despite the view that a delay would hurt the economy, the Labour party has built its election platform around the premise of improving the economy for its UK citizens. Johnson, on the other hand, has been focusing his efforts on the importance of getting Brexit done.

The latest poll data shows the Tories lead rising slightly although it’s far from certain the Thursday’s election will not result in a hung parliament.

Investors seem fairly confident that Johnson will get his majority and have been buying up Sterling in response. The technical indicators for GBP/USD show potential for further upside although the pair trades near a significant resistance area.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 1.27.

The projected upper bound is: 1.34.

The projected lower bound is: 1.30.

The projected closing price is: 1.32.

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 28 white candles and 20 black candles for a net of 8 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 90.6636. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 14 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 70.92. This is where it usually tops. 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 sell 34 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 134.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 14 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 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed up 0.001 at 1.315. Volume was 25% below average (neutral) and Bollinger Bands were 16% narrower than normal.

Open     High      Low     Close     Volume___
1.314 1.318 1.311 1.315 83,148
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.28 1.27
Volatility: 6 10 9
Volume: 96,949 104,588 129,506

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 3.5% 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 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 0 periods. Our momentum oscillator is currently indicating that GBP= is currently in an overbought condition.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

Latest posts by HEFFX Australia (see all)