GBP/USD, EUR/GBP, GBP/JPY - Prices, Charts, and Analysis
- GBP/USD is weak but the medium-term trend remains positive.
- EUR/GBP is consolidating Thursday’s sharp move higher.
- GBP/JPY outlook looks mixed.
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Cable (GBP/USD) is trading just below this week’s open after giving all of its weekly gains in one move on Thursday. Rocked by the vote split at Thursday’s BoE MPC meeting, Sterling tumbled by nearly three big figures (high to low) before stalling ahead of both the 20- and 200-day moving averages. These may provide some short-term support for the pair all the way down to 1.2100 but a confirmed break below here would leave 1.1940 and 1.1907 as the next areas to watch. Sterling may grind higher going into the Christmas break – the medium-term technical outlook still supports positive sentiment - but this week’s 1.2447 high is unlikely to be tested for some time.
GBP/USD Daily Price Chart– December 16, 2022
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EUR/GBP put in an out-sized move on Thursday after the latest ECB rate decision where President Christine Lagarde sent a strong hawkish message to the market. The pair had been trading sideways in a supportive zone for the last three weeks before the sharp move higher. EUR/GBP tested, broke above, and then returned to a prior level of resistance around 0.8725 and a confirmed break of this level would leave 0.8828 and 0.8866 as the next levels of short-term resistance. All three moving averages are now supportive. The CCI indicator shows the pair in overbought territory and this may need to be tempered before EUR/GBP moves higher.
EUR/GBP Daily Price Chart – December 16, 2022
| Change in | Longs | Shorts | OI |
| Daily | -4% | -2% | -4% |
| Weekly | -9% | 5% | -6% |
Retail trader data shows 48.32% of traders are net-long with the ratio of traders short to long at 1.07 to 1.The number of traders net-long is 27.75% lower than yesterday and 25.80% lower from last week, while the number of traders net-short is 61.50% higher than yesterday and 41.05% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/GBPprices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bullish contrarian trading bias.
GBP/JPY has given back all of this week’s gains and is trading among a cluster of recent prints. The short-term outlook is unclear with the pair trading on either side of the 20- and 50-day moving averages while the CCI indicator is mid-market. A cluster of short-term highs around 169.00 will act as resistance, while the December 2 low just above 164 should act as initial support.
GBP/JPY Daily Price Chart – December 16, 2022
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What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
