TALKING POINTS IN POUND STERLING

  • Poor economic data from the UK is contributing to the decline of the British pound.
  • Hawkish Fed adds to sterling’s woes.
  • March 2020 swing lows are a thing of the past?

Recommended by Warren Venketas

How to trade GBP/USD

GBP/USD FUNDAMENTAL CONTEXT

The pound had a torrid week last week as we expect a central bank filled windfall ahead of us. The Bank of England (BoE). Has a difficult task ahead, but at least the central bank has had one more week to analyze the current situation after the date of the previous meeting was postponed due to the unfortunate death of Queens.

Money markets are currently pricing approximately 50% luck be one 50bps Where 75 basis points rising interest rates, but after reviewing UK economic data over the past week, I tend to favor the former. With GBP so weak at the moment, the 50bps the rise could further deepen the decline and increase inflationary pressures for the UK. Additionally, the Fed will be looking to continue its aggressive trajectory to stifle inflation, so it will be interesting to see whether or not the BoE reacts to the Fed, particularly if it chooses to be ultra-hawkish and pay interest rates. advance in 100bps.

GBP/USD ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

GBP/USD DAILY CHART

Automatically generated chart description

Chart prepared by Warren VenketasGI

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GBP/USD price action shows penetration below March 2020 low at 1.1410, now opening up the possibility of later support areas. The Relative Strength Index (RSI) may be printing higher lows (green) while the Cable is printing lower lows. This phenomenon is known as bullish divergence and can lead to an upward reversal. Fundamentals are not yet in line with this outlook, especially with the UK heading into the winter months in the midst of an energy crisis.

A candle close to the 1.1410 low could tempt the bulls back, keeping the pound afloat ahead of the BoE meeting.

Key resistance levels:

Main support levels:

CUSTOMER FEELING IG LOWER

IG Customer Sentiment Data (IGCS) shows that retail traders are currently LONG on GBP/USDwith 81% of traders currently holding long positions (as of today). At DailyFX, we typically take a contrarian view of crowd sentiment, resulting in a short-term bearish bias.

Contact and follow Warrenon Twitter:@Wenketas

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