News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • The growth-linked New Zealand Dollar may rise on the upcoming #RBNZ rate decision following rosy economic data. However, downside potential in the S&P 500 could offset $NZDUSD gains. Get your #currencies update from @ddubrovskyFX here: https://t.co/LfCe6C6G3P https://t.co/kUeBxxeaEf
  • It was a quiet week in Aussie as $AUDUSD put in its second consecutive week of indecision. But taking a more granular look highlights the potential for a reversal scenario. Get your #currencies update from @JStanleyFX here: https://t.co/PPK20nubAf https://t.co/0nfmRRFNnz
  • The S&P 500 pushed the market's comfort with a head-and-shoulders pattern through Friday's close. What should we look for in technical patterns, overlapping fundamental tides and speculative positioning for the likes of $EURUSD next week? https://www.dailyfx.com/forex/video/daily_news_report/2020/09/19/EURUSD-Pressure-Building-while-Anxious-Traders-Weigh-Did-SP-500-Break.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/lgVJVwi8th
  • Sterling remains trapped by overarching fundamentals drivers and both $GBPUSD and $EURGBP are going to have to wait until the Brexit dust settles. Get your #currencies update from @nickcawley1 here: https://t.co/vF1K1cy0nd https://t.co/NSA7qiQihc
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/d9EmTOHyTv
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/xqbUxwWgTZ
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/Gi8LHCT5sB
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/FFmRYyx4ou
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/r7aJb4qpqc
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/ERyiY47G5H https://t.co/fIGDaDW21V
GBP: Further Weakness Likely, But Not Inevitable

GBP: Further Weakness Likely, But Not Inevitable

2017-10-07 01:42:00
Martin Essex, MSTA, Analyst
Share:
GBP: Further Weakness Likely, But Not Inevitable

Talking Points:

  • UK Prime Minister Theresa May remains under pressure ahead of the start of the fifth round of Brexit negotiations between the EU and the UK.
  • Both fundamentally and technically, GBP/USD looks set for further falls.
  • However, there’s bound to be a correction at some point; the key question is when.

Fundamental Forecast for GBP: Bearish

What Does the Fourth Quarter Hold for the Pound, Equities, Oil and Other Key Markets? Find out here

GBP/USD is continuing to slide and it’s hard to see an end to its current weakness. Rebel members of her ruling Conservative Party are challenging UK Prime Minister Theresa May’s leadership; the fifth round of Brexit talks begins in Brussels Monday with the two sides as far apart as ever; the economic data have been weak; and the pair has broken down through several key support levels on the chart.

That all suggest further depreciation to come, particularly as the US Dollar remains strong. However, as the chart below shows, GBP/USD is approaching oversold territory, sending out a warning signal.

Chart: GBP/USD Daily Timeframe (June 6 – October 6, 2017)

GBP: Further Weakness Likely, But Not Inevitable

Chart by IG

So what could cause a correction? First, the attempt to force out May and choose a successor appears to have failed, with the rebels unable to gain enough support from other Members of Parliament, and that has boosted her authority, at least for now. As for Brexit, there is always the chance of a breakthrough, unlikely though that seems currently.

Then there’s the economic data. In the past week, purchasing managers’ indexes for the UK construction and manufacturing sectors in September were both weaker than expected. However, the PMIs are seen as “soft” data and the week to come sees “hard” – or official – data on industrial production, manufacturing output and trade. If they turn out stronger than predicted, that could revive forecasts, which are already high, that a UK interest rate increase is just around the corner.

It has to be said, though, that this all seems rather unlikely and the more probable outcome is a further slide in GBP/USD, particularly if there are any hints from the Bank of England that now may not be the right time to raise rates after all. Note too that IG Client Sentiment data are currently sending out a bearish signal.

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

You can learn more by listening to our regular trading webinars; here’s a list of what’s coming up

Check out our Trading Guides: Several new ones are now available including Forex for Beginners, Building Confidence and Traits of Successful Traders

Like to know about the Traits of Successful Traders? Just click here

Or New to Forex? That guide is here

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES