British Pound: USD/GBP (GBP=X) – Will Pound Resilience Persist?

British Pound: USD/GBP (GBP=X) – Will Pound Resilience Persist?

British Pound: USD/GBP (GBP=X) – Will Pound Resilience Persist?

Despite shockingly bad US jobs data published last week, the British Pound to US Dollar (GBP/USD) exchange rate ultimately slipped lower. Even though the Pound was fairly resilient last week, it was unable to hold its ground or sustain any gains against the US Dollar which is continuing to benefit from the market’s high demand for safe haven currencies. Will the US Dollar’s strong streak continue though? Investors may be hesitant to buy the US currency too much higher.

While GBP/USD movement was much more limited last week than the week before, it did eventually see some fairly solid direction.

GBP/USD spent the week trending with a downside bias. The US Dollar’s safe haven appeal kept it high, despite the Pound gaining against many other major currencies.

GBP/USD opened last week at the level of 1.2454 and slipped right away, eventually trending near the week’s lows of 1.2249 on Friday afternoon.

Still, the Pound’s relative resilience meant the pair avoided falls to the levels seen throughout the previous week.

Investors found both the Pound and the US Dollar appealing last week.

The Pound continued to benefit from rival weakness as it clawed back more of the losses it experienced throughout March.

Sterling was fairly appealing even amid a lack of fresh UK support, as there were no fresh strong datasets or supportive fiscal stimulus developments throughout the week.

However, the US Dollar was even more appealing. The US Dollar once again benefitted from the market’s broad demand for safe havens, as the week’s fiscal policy developments did not do enough to keep risk-sentiment afloat.

In fact, the market’s shock towards shockingly bad US jobs data only further boosted appetite for safe havens, rather than making the US Dollar weaker.

While the US economic outlook is considerably worsening, the poor US job stats have also made investors more worried about the global economy and the chances of a global recession.

Reacting to poor UK PMI data published on Friday morning, Duncan Brock from the Chartered Institute of Procurement and Supply said a global recession was inevitable.

‘It’s increasingly difficult to find the words to describe the devastation as every region in the world fights to save human life as the first priority. The likelihood of a global recession is now a given, though its duration and severity has yet to reveal itself.’

This has kept safe haven demand high and the US Dollar strong.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 1.26.

The projected lower bound is: 1.18.

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 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 39.0189. 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 45.74. 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 9 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 41. This is not a topping or bottoming area. The last signal was a buy 9 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 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.003 at 1.223. Volume was 84% below average (consolidating) and Bollinger Bands were 151% wider than normal.

Open     High      Low     Close     Volume___
1.226 1.226 1.221 1.223 17,696
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.22 1.27 1.27
Volatility: 22 21 14
Volume: 137,604 123,191 112,468

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 3.3% below its 200-period moving average and is in an downward 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 bearish on GBP= and have had this outlook for the last 61 periods.

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