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
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
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
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
More View more
Real Time News
  • French Finance Minister Le Maire positive for Covid - BBG
  • Fed's Kashkari: - The U.S. allowing overnight bank funding is "absurd" - BBG
  • Commodities Update: NYM WTI Crude 41.11 (+0.34%), ICE Brent Crude 43.09 (-0.48%), NYM NYH Gasoline 123.30 (+0.70%). [delayed]
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Gold: 0.47% Oil - US Crude: -0.02% Silver: -0.36% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/IALkVf9gae
  • The RBNZ, seems poised to move into negative interest rate territory in the first half of 2021. Get your market update from @CVecchioFX here:https://t.co/4M9OOelADF https://t.co/xtgrSZPNtI
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.13%, while traders in NZD/USD are at opposite extremes with 71.63%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/qSv1DjTz9k
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.35% Germany 30: -0.38% France 40: -0.39% Wall Street: -1.09% US 500: -1.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/ee1csUe04G
  • NASDAQ EXTENDS FALL, LAST DOWN ABOUT 2.1% Damn this Apple Watch is good... where Jay Powell at? https://t.co/8yXsJKehxy
  • France daily Covid cases rises above 13,000, highest since lockdown - BBG
  • GBP falling to fresh sessions lows following UK PM Johnson's warning that the UK is on the verge of having a second wave of Covid-19
GBPUSD Rate Defends Bull Trend Ahead of UK CPI Amid Brexit Extension

GBPUSD Rate Defends Bull Trend Ahead of UK CPI Amid Brexit Extension

2019-04-13 10:00:00
David Song, Strategist
Share:
GBP

British Pound Rate Talking Points

GBP/USD recoups the losses from earlier this week as the European Union (EU) pushes the Brexit deadline out to October 31, and fresh data prints coming out of the U.K. may fuel the advance from the monthly-low (1.2987) should the developments put pressure on the Bank of England (BoE) to further normalize monetary policy.

Looking for a technical perspective on the GBP ? Check out the Weekly GBP Technical Forecast.

Fundamental Forecast for British Pound: Bullish

Headlines surrounding the Brexit saga may generate increased volatility in the British Pound as Chancellor of Exchequer Philip Hammond insists that a deal can be reached over the coming weeks, and it remains to be seen if Prime Minister Theresa Maywill be able to deliver a meaningful announcement going into the Easter holiday as U.K. lawmakers struggle to meet on common ground.

In turn, updates to the Consumer Price Index (CPI) may shake up the near-term outlook for GBP/USD as the headline reading for U.K. inflation is anticipated to increase to 2.0% from 1.9% per annum in February. The core rate is also expected to nudge higher, with the index projected to print at 1.9% in March compared to 1.8% the month prior, and signs of sticky price growth may push the Bank of England (BoE) to adopt a more hawkish tone as ‘the Committee continues to judge that, were the economy to develop broadly in line with those projections, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon.

Bank Rate

Keep in mind, the BoE appears to be in no rush to implement higher interest rates as ‘shifting expectationsabout the potential nature and timing of the United Kingdom’s withdrawal from the European Union have continued to generate volatility in UK asset prices, particularly the sterling exchange rate,’ and the Monetary Policy Committee (MPC) may largely refrain from altering the forward-guidance at the next quarterly meeting on May 2 as officials warn that ‘the monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.

With that said, positive data prints coming out of the U.K. may spark a bullish reaction in the British Pound as it puts pressure on the Governor Mark Carney and Co. to prepare U.K. households and businesses for higher interest rates, but the recent pickup in British Pound volatility continues to shake up market participation amid an ongoing shift in retail interest.

GBPUSD Client Positioning

The IG Client Sentiment Report shows 63.8% of traders are now net-long GBP/USD compared to 72.7% earlier this week, with the ratio of traders long to short at 1.76 to 1. Keep in mind, traders have been net-long since March 26 when GBP/USD traded near 1.3200 handle even though price has moved 0.8% lower since then.

The number of traders net-long is 10.9% lower than yesterday and 12.6% lower from last week, while the number of traders net-short is 1.1% higher than yesterday and 4.4% higher from last week. Net-long interest has fallen back from an extreme reading, with the change indicative of profit-taking behavior as GBP/USD extends the rebound from the monthly-low (1.2987), while net-short interest recovers after narrowing during the previous week.

The recent developments raise the risk for range-bound prices as retail sentiment falls back from an extreme reading, but the GBP/USD appears to be coming off of channel support, with the Relative Strength Index (RSI) appears to be highlighting a similar dynamic as it threatens the bearish formation carried over from the previous month.

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

GBP/USD Rate Daily Chart

GBP/USD

The broader outlook for GBP/USD remains mired by the failed attempt to close above the Fibonacci overlap around 1.3310 (100% expansion) to 1.3370 (78.6% expansion), but the pound-dollar exchange rate appears to be finding channel support amid the lack of momentum to test the March-low (1.2960).

In turn, GBP/USD may face range-bound conditions over the coming days asthe 1.2950 (23.6% retracement) to 1.3000 (61.8% retracement) area offers support, with a move back above 1.3090 (38.2% retracement) raising the risk for a move towards 1.3170 (78.6% retracement).

Additional Trading Resources

For more in-depth analysis, check out the 2Q 2019 Forecast for GBP/USD

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

Other Weekly Fundamental Forecast:

Australian Dollar Forecast – Australian Dollar Outlook Bearish on RBA. AUDUSD Eyes China Q1 GDP

Crude Oil Forecast – Crude Could Crumble if Growth Concerns Catch Fire Again

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

DISCLOSURES