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
Subscribe
Please try again
EUR/USD
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
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • Earnings season begins this week with the arrival of quarterly reports from the country’s largest banks. Can they shrug off losses from the recent Archegos blowup and rally higher or will risk aversion take root? Market update from @PeterHanksFX here: https://t.co/Q0LEH8fHzu https://t.co/ywVQ1KwZ26
  • Traders focus a lot of their energy on spotting the perfect time to enter a trade. While this is important, it is ultimately where traders choose to exit trades that will determine success. Learn about the three types of trading exit strategies here: https://t.co/muYkTNXH7s https://t.co/i70XLrni1w
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/Zl7sfu0OT2
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/QqlZ2dQgVv
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/lvIUu5FHoq
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/bpKdIqGxsn
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/jmcAIW4w5k
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/M9isuvnzqF
  • The British Pound is giving back some of its multi-month gains with some pairs testing notable support despite a positive fundamental backdrop. Get your market update from @nickcawley1 here: https://t.co/6Ct5R0H41F https://t.co/c4rXmMjMrv
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5cVYOn https://t.co/4dhCP5pnxM
GBP/USD Rate Remains Vulnerable as RSI Sits in Oversold Territory

GBP/USD Rate Remains Vulnerable as RSI Sits in Oversold Territory

David Song, Strategist

British Pound Talking Points

GBP/USD trades on a firmer footing amid an unexpected rebound in U.S. Retail Sales, but the current environment keeps the downside targets on the radar as the Relative Strength Index (RSI) continues to sit in oversold territory.

Image of daily change for major currencies

GBP/USD Remains Vulnerable as RSI Sits in Oversold Territory

Image of daily change for gbpusd

GBP/USD pares the decline from earlier this week as U.K. household spending expands 0.9% in July, and signs of stronger consumption may keep the Bank of England (BoE) on track to further normalize monetary policy as ‘recent data appear to confirm that the dip in output in the first quarter was temporary, with momentum recovering in the second quarter.

In turn, the BoE may continue to strike a hawkish tone at the next meeting on September 13 as ‘an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon,’ but Governor Mark Carney & Co. appear to be in no rush to deliver another rate-hike in 2018 as ‘the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal.

With that said, the ongoing negotiations surrounding the Brexit process may continue to sway the exchange rate as the BoE delivers a dovish rate-hike earlier this month, and the British Pound remains at risk of facing headwinds over the remainder of the year as the Monetary Policy Committee (MPC) warns that ‘any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.

Image of IG client sentiment

At the same time, the IG Client Sentiment Report still shows retail sentiment near extremes, with 71.7% of traders are net-long GBP/USD as the ratio of traders long to short stands at 2.54 to 1. Traders have remained net-long since April 20 when GBP/USD traded near the 1.4050 regioneven though price has moved 9.6% lower since then.The number of traders net-long is 0.3% higher than yesterday and 4.3% lower from last week, while the number of traders net-short is 0.4% higher than yesterday and 1.1% lower from last week.

The extreme reading in retail positioning continues to offer a contrarian view to crowd sentiment, and recent developments in the Relative Strength Index (RSI) keeps the downside targets on the radar for GBP/USD as the oscillator continues to sit in oversold territory. Keep in mind, the last instance occurred back in May, with the oscillator holding below 30 for nearly a month, which was largely accompanied by a decline in GBP/USD. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

GBP/USD Daily Chart

Image of gbpusd daily chart
  • Note that the broader outlook for GBP/USD remains tilted to the downside as both price and the RSI extend the bearish formations from earlier this year.
  • The 1.2630 (38.2% expansion) to 1.2640 (23.6% retracement) remains on the radar as the RSI holds in oversold territory, with a break/close below the stated region raising the risk for a move back towards 1.2550 (78.6% expansion), which sits beneath the June 2017-low (1.2589).

For more in-depth analysis, check out the Q3 Forecast for the British Pound

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