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
Bullish
GBP/USD
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
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
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
Bitcoin
Mixed
More View more
Real Time News
  • The term ‘Ichimoku,’ literally means ‘one glance,’ in Japanese. Ichimoku, or the one glance indicator, is considered to be a self-contained system in the fact that no additional indicators are necessary. Learn more about the 'one glance' indicator here: https://t.co/T7o7W9C0Ro https://t.co/7bhBfWvEkR
  • Support and resistance are the cornerstone of technical analysis, making it the foundation that you build your knowledge on. Build a stronger foundation here: https://t.co/yXLaRpl90I https://t.co/85JHunf2Xf
  • Many traders ask how a trading method that is 77 years old is applicable today. Learn about the Gartley pattern and see how you can incorporate it into your trading style here: https://t.co/2yPmGH0XvT https://t.co/rtqUKZSdn1
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/ywv7RVP9qY
  • Crude oil prices may rise on supply-disruption fears after the outcome of the Iran election, but sentiment from #coronavirus fears may derail Brent’s recovery ahead of the G20 summit. Get your crude #oil market update from @ZabelinDimitri here: https://t.co/83iTphwaWv #OOTT https://t.co/RgQku64XyW
  • The Australian Dollar remains severely weighed down by #coronavirus worries and a lack of domestic data points will probably keep that story in the driving seat. Get you $AUDUSD market update from @DavidCottleFX here: https://t.co/qswUnnXVwR https://t.co/NyZ0iEpILm
  • While Sino-US trade jitters are temporarily abating, China-Swedish trade tensions are rising as a part of a political contagion of growing economic hostilities between nations across the world. Get your market update from @ZabelinDimitri here:https://t.co/F1fVoyzoz5 https://t.co/uOLKRebXB1
  • #DidYouKnow the global trade volumes dropped by close to 10% amid the Great Recession. Want to know your #tradewars history? Get it here: https://t.co/f4loFVzX6w https://t.co/GDTFHvUIf7
  • The spread of #coronavirus promises a global economic hit at a time when the global economy is perhaps especially ill-equipped to deal with one. Growth-correlated assets are vulnerable. Get your market update from @DavidCottleFX here: https://t.co/0If0Jw7c2P https://t.co/mph6z70XeF
  • The $JPY continues to struggle against the US Dollar but there seems little appetite to push USD/JPY much beyond a range which has tended to reassert itself since late last year. Get your market update from @DavidCottleFX here: https://t.co/iaVfPSuXy4 https://t.co/1QPhJmYlQv
GBP/USD Range Snaps, RSI Remains Extreme Ahead of BoE, FOMC Rhetoric

GBP/USD Range Snaps, RSI Remains Extreme Ahead of BoE, FOMC Rhetoric

2018-05-15 16:04:00
David Song, Currency Strategist
Share:

BRITISH POUND TALKING POINTS

GBP/USD snaps the range from the previous week following a bulk of data coming out of the U.K. & U.S. economy, and fresh rhetoric from Bank of England (BoE) and Federal Reserve officials may largely influence the exchange rate over the coming days as market participants weigh the outlook for monetary policy. Recent price action keeps the near-term outlook tiled to the downside as the Relative Strength Index (RSI) continues to flash an extreme reading, with the momentum indicator still trading in oversold territory.

Image of daily change for major currencies

GBP/USD SNAPS RANGE AHEAD OF BANK OF ENGLAND (BOE), FEDERAL OPEN MARKET COMMITTEE (FOMC) RHETORIC

Image of daily change for GBPUSD

The limited reaction to the 197K expansion in U.K. employment suggests the figures were largely overshadowed by the 31.2K rise in claims for unemployment benefits, with the mixed prints for Average Weekly Earnings likely to keep the Bank of England (BoE) on the sidelines at the next meeting on June 21 as ‘inflation is projected to fall back slightly more quickly than in February.’ In turn, BoE Chief Economist Andrew Haldane may largely tame expectations for an imminent rate-hike as the Monetary Policy Committee (MPC) member is scheduled to speak later this week, and a slew of dovish rhetoric may generate headwinds for the British Pound as Governor Mark Carney and Co. appear to be in no rush to further normalize monetary policy.

Image of Fed Fund Futures

In contrast, the 0.3% expansion in U.S. Retail Sales paired with the unexpected uptick in the Empire Manufacturing survey is likely to keep the Federal Open Market Committee (FOMC) on course to deliver higher borrowing-costs over the coming months as it instills an improved outlook for growth and inflation. As a result, a growing number of FOMC officials may adopt a more hawkish tone as San Francisco Fed President John Williams, Atlanta Fed President Raphael Bostic, Cleveland Fed President Loretta Mester and Governor Lael Brainard are all slated to speak over the remainder of the week, and the fresh comments may heighten the appeal of the greenback should the 2018-voting members show a greater willingness to implement four rate-hikes in 2018.

However, more of the same from Fed officials may rattle the recent strength in the greenback as the central bank continues to project a terminal benchmark interest rate of 2.75% to 3.00%, and it seems as though Chairman Jerome Powell and Co. will tolerate above-target price growth for the foreseeable future as ‘inflation on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term.

GBP/USD DAILY CHART

Image of GBPUSD daily chart
  • GBP/USD remains vulnerable to further losses as long as the Relative Strength Index (RSI) holds below 30, and the bearish momentum may reassert itself over the coming days as the oscillator appears to be pushing deeper into oversold territory.
  • The string of failed attempts to close above 1.3560 (50% expansion) may open up the downside targets as GBP/USD snaps the range from the previous week, with a break/close below the 1.3440 (38.2% expansion) to 1.3460 (50% expansion) region raising the risk for a move towards 1.3370 (78.6% expansion).
  • Next area of interest coming in around 1.3280 (23.6% expansion) to 1.3300 (100% expansion), which largely lines up with the December-low (1.3302).

For more in-depth analysis, check out the Q2 Forecast for the British Pound

Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

Image of DailyFX economic calendar

ADDITIONAL TRADING RESOURCES

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 2018.

--- Written by David Song, Currency Analyst

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.