British Pound: USD/GBP (GBP=X) uncertainty about Brexit and Trump’s trade wars weigh
Pound bulls have probably breathed a sigh of relief after Mark Carney, Governor of the Bank of England, refrained from causing carnage – skipping recent developments in his speech. However, that is as far as relief goes.
One day before PM Theresa May officially quits her post as leader of the Conservative Party and it is unclear who will enter 10 Downing Street. Environment Secretary Michael Gove has suggested that Brexit may be temporarily delayed – differing from his competitors Boris Johnson and Dominic Raab. The trio seems to be in the lead, but the contest is wide open.
And while US President Donald Trump has offered the UK a “phenomenal deal” after Brexit, he seems to want a wall on the border between the Republic of Ireland and Northern Ireland – going against the will of most British politicians.
More importantly, Trump is boosting the US dollar with his trade wars. Initial negotiations between the US and Mexico have ended without an accord and both sides meet again today. Trump’s verdict was that his southern neighbor’s offers were “not enough” and that he may still slap tariffs as early as Monday. The president is also threatening China with fresh duties.
Apart from trade-related safe-haven flows, the greenback has also risen on the upbeat ISM Non-Manufacturing PMI that came out at 56.9 points after falling earlier on a disappointing ADP Non-Farm Payrolls increase of only 27K – the worst in over nine years.
With no significant events on the calendar, political developments remain in the limelight ahead of Friday’s all-important US Non-Farm Payrolls.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 1.28.
The projected upper bound is: 1.28.
The projected lower bound is: 1.26.
The projected closing price is: 1.27.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles.
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 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 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 74.8583. This is not an overbought or oversold reading. The last signal was a buy 9 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 39.01. 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 4 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 50. This is not a topping or bottoming area. The last signal was a buy 4 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 buy 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed up 0.000 at 1.269. Volume was 11% below average (neutral) and Bollinger Bands were 5% wider than normal.
Open High Low Close Volume___
1.268 1.274 1.267 1.269 144,333
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.27 1.29 1.29
Volatility: 5 6 10
Volume: 145,511 151,940 174,801
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 2.0% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 16 periods.