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
Mixed
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Gold: -0.93% Silver: -1.67% Oil - US Crude: -2.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/zljwnQwRbk
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/GgrFV6rChg
  • Prior to the oil blockade in January, Libya had been producing circa 1.1mbpd https://t.co/ZS6LPcKbyF
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.42% 🇨🇦CAD: -0.23% 🇦🇺AUD: -0.39% 🇪🇺EUR: -0.50% 🇬🇧GBP: -0.58% 🇳🇿NZD: -0.65% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0EqnRHMZJ3
  • Libya has restarted oil production by 90kbpd and will resume an extra 220kbpd on September 24th, according to sources #OOTT
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: US 500: -1.50% Wall Street: -1.78% France 40: -3.30% Germany 30: -3.41% FTSE 100: -3.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2G6XT0J6v5
  • Tune in to @nickcawley1 's #webinar at 6:30 AM ET/10:30 AM GMT to prepare for key UK events and markets in the week ahead. Register here: https://t.co/xewSeUoDaT https://t.co/I8N4F5SmRK
  • Germany 30 IG Client Sentiment: Our data shows traders are now net-long Germany 30 for the first time since Sep 08, 2020 when Germany 30 traded near 12,883.80. A contrarian view of crowd sentiment points to Germany 30 weakness. https://www.dailyfx.com/sentiment https://t.co/PrXKfwUQbT
  • UK's Hancock says final decisions have not been taken in response to surge in COVID cases $GBP
  • #SP500 futures tumbling through Bear Flag support at the 3300 mark. Implied measured move suggests a push to 3000 could be on the cards if price breaks below the June high (3231.25) $ES $SPX https://t.co/o26aOMmin8 https://t.co/pS7A9CVmt6
GBP/USD October Rebound Vulnerable to Lackluster U.K. GDP Report

GBP/USD October Rebound Vulnerable to Lackluster U.K. GDP Report

2017-10-20 15:00:00
David Song, Strategist
Share:

Talking Points:

- GBP/USD October Rebound Vulnerable to Lackluster U.K. GDP Report.

- USD/CAD Starts to Carve Inverse H&S Formation as Lackluster CPI Curbs Bets for BoC Rate-Hike.

- Sign Up & Join DailyFX Currency Analyst David Song to Discuss Key FX Themes & Potential Trade Setups.

DailyFX TableGBP/USD

Fresh comments from U.K. Prime Minister Theresa May appear to be propping up the British Pound, with GBP/USD bouncing back from a fresh weekly-low (1.3088), but another batch of lackluster data prints may undermine the near-term rebound in the exchange rate as it encourages the Bank of England (BoE) to keep the benchmark interest rate at the record-low.

DailyFX 4Q 2017 Forecasts Are Now Available!

Fears of a ‘hard Brexit’ appear to dissipating as Prime Minister May pledges to draw up a contingency plan and expresses that the government wants European Union (EU) nationals to stay in the U.K. even if they fail strike a deal, but the growing rift within the Conservative party may continue to weigh on the British Pound as the threat of a possible shift in leadership looms. With that said, GBP/USD may larger preserve the monthly-opening range ahead of the next Bank of England (BoE) interest rate decision on November 2, but Governor Mark Carney and Co. may look to ‘withdrawal of part of the stimulus that the Committee had injected in August last year would help to moderate the inflation overshoot while leaving monetary policy very supportive.

Keep in mind, the BoE is likely to reiterate that ‘some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target,’ but the Monetary Policy Committee (MPC) may tame expectations for a series of rate-hikes especially as the 3Q U.K. Gross Domestic Product (GDP) report is anticipated to show the growth rate slowing to an annualized 1.4% from 1.5% during the three-months through June.

GBP/USD Daily Chart

GBP/USD Daily Chart
  • GBP/USD remains at risk of testing the monthly-low (1.3027) as it continues to carve a string of lower lows, while the Relative Strength Index (RSI) retain the bearish formation carried over from the previous month.
  • Failure to hold above the 1.3210 (50% retracement) region keeps the near-term outlook tilted to the downside, with a break/close below the Fibonacci overlap around 1.3300 (100% expansion) to 1.3320 (38.2% retracement) raising the risk for a move back towards the 100-Day SMA (1.3046); next downside hurdles comes in around 1.2950 (23.6% expansion) to 1.2960 (78.6% retracement), the former-resistance zone.
USD/CAD

USD/CAD breaks the monthly opening range following a batch of weaker-than-expected data prints coming out of Canada, and pair may continue to gain ground ahead of the Bank of Canada (BoC) interest rate decision on October 25 as the central bank is now largely anticipated to keep the benchmark interest rate at 1.00%.

The below-forecast print for headline inflation paired with the 0.3% contraction in Retail Sales may encourage Governor Stephen Poloz and Co. to carry the current policy into 2018 as ‘there remains some excess capacity in Canada’s labour market, and wage and price pressures are still more subdued than historical relationships would suggest.’ In turn, USD/CAD stands at risk of extending the rebound from the 2017-low (1.2061), but the broader shift in market behavior may continue to unfold over the coming months as the BoC appears to be on course to further normalize monetary policy in 2018.

USD/CAD Daily Chart

USD/CAD Daily Chart

Chart - Created Using Trading View

  • Near-term outlook remains constructive for USD/CAD as it holds above the monthly-low (1.2433), with the 1.2440 (23.6% expansion) area offering support; the pair stands at risk for a more material correction as an inverse head-and-shoulders formation appears to be taking shape, while the Relative Strength Index (RSI) extends the bullish formation carried over from the summer months.
  • Will keep a close eye on the oscillator as it approaches overbought territory, with a break above 70 raising the risk for a further advance in the exchange rate as the bullish momentum gathers pace.
  • A break/close above the 1.2620 (50% retracement) hurdle opens up the next region of interest around 1.2770 (38.2% expansion) to 1.2830 (38.2% retracement), which largely lines up with the August-high (1.2778).

Retail Sentiment

Retail Sentiment

Track Retail Sentiment with the New Gauge Developed by DailyFX Based on Trader Positioning

  • Retail trader data shows 48.3% of traders are net-long GBP/USD with the ratio of traders short to long at 1.07 to 1. The percentage of traders net-long is now its lowest since October 12 when GBP/USD traded near 1.32668. The number of traders net-long is 11.7% lower than yesterday and 5.3% higher from last week, while the number of traders net-short is 5.7% higher than yesterday and 9.0% higher from last week.
  • Retail trader data shows 55.1% of traders are net-long USD/CAD with the ratio of traders long to short at 1.23 to 1. The percentage of traders net-long is now its highest since October 10 when USDCAD traded near 1.25146. The number of traders net-long is 0.2% higher than yesterday and 6.2% higher from last week, while the number of traders net-short is 11.3% lower than yesterday and 31.4% lower from last week.
DailyFX Calendar

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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

DISCLOSURES