SUMMARY: Sell Now
Moving Average: Sell
Technical Indicators: Sell
Fundamentals GBP/USD: Sell/Neutral
GBPUSD Live Chart
Technical Review by IRONFOREX
GBPUSD slid during the European morning Monday, after it hit resistance around 30 pips above the psychological barrier of 1.2500 (R1).
Given that the rate has been oscillating between that hurdle and the support zone of 1.2330 (S2), I would consider the short-term outlook to be flat for now.
Nevertheless, I see the likelihood for the pair to continue trading south for a while, perhaps to challenge the lower bound of the aforementioned range, at 1.2330 (S2).
Our near-term momentum studies have been oscillating around their equilibrium lines, supporting the flat short-term path.
As for the broader trend, the close below 1.2850 (R3) on the 4th of October has signaled the downside exit of the sideways range the pair had been trading since the 24th of June and turned the longer-term outlook back to the downside.
Therefore, given that the pair is still trading below 1.2850 (R3), I would consider the longer-term outlook to remain cautiously negative. I would treat any rebounds that stay limited below that key hurdle as corrective moves.
- Support: 1.2400 (S1), 1.2330 (S2), 1.2230 (S3)
- Resistance: 1.2500 (R1), 1.2675 (R2), 1.2850 (R3)
Fundamental Review by IRONFOREX
The most noteworthy movement among the G10 currencies this morning was the slide in the British pound. With no clear fundamental catalyst behind the move, GBP tumbled notably against its major counterparts before finding fresh buy orders and recovering a fraction of its losses.
Given that there are no major economic data releases on the calendar today, market participants are likely to shift their attention to ECB President Mario Draghi, who will address the European Parliament.
We believe that investors will be looking for clues concerning what measures the Bank will opt to introduce at its meeting next week.
With regards to this gathering, we hold the view that the ECB is likely to extend the minimum duration of its QE program, but will shy away from introducing any fresh easing measures, considering the resilience of the bloc’s data in recent months.
GBPUSD Trading Position
Don’t let one day of data change your position. The trend is clearly down. Sell until London negotiate a good deal to exit the EU and after that, continue selling if the deal isn’t good enough.
Factors Influencing the GBPUSD
- Monetary policy
- Price inflation, cause volatility in the GBP USD currency pair.
- Confidence and sentiment
- Economic growth (GDP)
- Balance of payments
- Interest Rate. The difference in interest rate existing between the Bank of England (BoE) and the Federal Reserve High yield. Over and above, the growth probability in the UK also triggers GBP USD go higher.
- Import Export flow between US and Britain.
- Capital flow between America and Great Britain.
- UK’s Confidence and Sentiment. Follow “Gfk Consumer Confidence” and “Nationwide Consumer Confidence”
- UK’s Balance of Payments. Follow ” Trade Balance” and “Current Account”
The U.K economy is dominate by:
- The service sector, contributing around 78% of GDP
- The financial services industry is particularly important and London is one of the world’s largest financial centres.
- Aerospace industry is the second- or third-largest national aerospace industry.
- The pharmaceutical industry has the third-highest share of global pharmaceutical.
- The automotive industry is also a major employer and exporter.