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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.34% 🇨🇭CHF: 0.17% 🇪🇺EUR: -0.05% 🇨🇦CAD: -0.35% 🇦🇺AUD: -0.95% 🇳🇿NZD: -0.96% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/33EP1DeeuH
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Gold: 0.69% Silver: -0.10% Oil - US Crude: -0.74% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/J4wTEmtAXA
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.56%, while traders in US 500 are at opposite extremes with 67.46%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/XboitD6oGi
  • The $AUD came into the New Year clinging to a very visible bullish trend. While the currency had a rather rough first nine months of last year. Get your AUD/USD technical analysis from @JStanleyFX here: https://t.co/HrLlgqvibu https://t.co/efoZc6VjGC
  • The US #StockMarket is on pace to close markedly lower to start the week with less than 30-minutes left in today's #trading session as #Coronavirus fears roil Wall Street S&P 500: -1.46% Dow Jones: -1.45% Nasdaq: -1.80% Russell 2K: -0.73% VIX: +22.25% $SPX $DJI $NDX $RUT $VIX
  • #Bitcoin Daily Pivot Points: S3: 7768.5 S2: 8055.53 S1: 8177.32 P: 8342.56 R1: 8464.35 R2: 8629.59 R3: 8916.62
  • The #Dow Jones remains elevated as tech and defensive sectors underpin the index. However, we see caution in chasing the market higher amid rising risks of a potential correction. Get your market update from @JMcQueenFX here:https://t.co/3klcZ6CHpe https://t.co/3xvxNNWb2O
  • RT @MarketWatch: Economic hit from coronavirus likely to be short lived, but it’s still ‘a little scary, frankly’ https://t.co/NyB3DCRpGS
  • Know the Slope. . . $SPX500 Daily - https://t.co/FoBtqk9CYA https://t.co/nkmzVkx5p6
  • $EURUSD Daily Pivot Points: S3: 1.095 S2: 1.0993 S1: 1.1009 P: 1.1035 R1: 1.1051 R2: 1.1078 R3: 1.112
GBPUSD Rate Vulnerable to Slowing UK Inflation, Retail Sales

GBPUSD Rate Vulnerable to Slowing UK Inflation, Retail Sales

2019-08-10 22:00:00
David Song, Currency Strategist
Share:
GBPUSD Price Chart

British Pound Rate Talking Points

GBPUSD trades near the 2019-low (1.2079) even though the Bank of England (BoE) sticks to the sidelines in August, and fresh developments coming out of the UK may do little to heighten the appeal of the British Pound amid the growing threat of a no-deal Brexit.

Fundamental Forecast for British Pound: Bearish

The British Pound may face a more bearish fate over the coming days as Prime Minister Boris Johnson remains adamant that the UK will depart from the European Union (EU) no later than the October 31 deadline, with the new leader hopeful that “our friends and partners will show common sense and that they will compromise.”

The comments suggest Mr. Johnson will make a hard push to renegotiate with less than 100 days till the deadline, but little indications of a potential trade deal may become a growing concern for the BoE as “the appropriate path of monetary policy will depend on the balance of the effects of Brexit.”

In turn, the Monetary Policy Committee (MPC) may adopt a dovish tone at the next meeting on September 19, and fresh data prints coming out of the economy may push the central bank to alter the forward guidance for monetary policy as “underlying growth appears to have slowed since 2018 to a rate below potential.”

The BoE may turn a blind eye to the UK employment report even though the economy is anticipated to add 107K jobs in June as the Consumer Price Index (CPI) is expected to slow to 1.9% from 2.0% per annum, while Retail Sales are projected to contract 0.2% in July.

Signs of a less robust economy may produce headwinds for the British Pound as it encourages the BoE to switch gears in 2019, but retail positions remain skewed even though GBPUSD trades near the yearly-low (1.2079).

GBPUSD Client Positioning

The IG Client Sentiment Report shows 77.7% of traders are still net-long GBPUSD compared to 81.2%last week, with the ratio of traders long to short at 3.47 to 1.

In fact, traders have remained net-long since May 6 when GBPUSD traded near the 1.3100 handle even though price has moved 7.3% lower since then. The number of traders net-long is 1.6% lower than yesterday and 6.2% lower from last week, while the number of traders net-short is 0.9% lower than yesterday and 0.8% lower from last week.

The ongoing tilt in retail position offers a contrarian view to crowd sentiment amid the trending market, with both price and the Relative Strength Index (RSI) tracking the bearish formations from earlier this year.

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

GBP/USD Rate Daily Chart

GBPUSD Daily Price Chart

Source: Trading View

Keep in mind, the broader outlook for GBP/USD is no longer constructive as the exchange rate snaps the upward trend from late last year after failing to close above the Fibonacci overlap around 1.3310 (100% expansion) to 1.3370 (78.6% expansion).

However, the string of failed attempts to close below the 1.2100 (61.8% expansion) handle may generate a larger rebound in GBPUSD, with a break/close above the 1.2240 (61.8% expansion) region opening up the Fibonacci overlap around 1.2370 (50% expansion) to 1.2440 (50% expansion).

Will keep a close eye on the RSI as the oscillator appears to be flashing a textbook buy signal, with the move above 30 raising the risk for a larger rebound in GBPUSD as the oscillator bounces back from oversold territory.

Additional Trading Resources

For more in-depth analysis, check out the 3Q 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.

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

DISCLOSURES

News & Analysis at your fingertips.