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
Bearish
GBP/USD
Mixed
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
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The Indian Rupee 2020 outlook is bearish as India faces stagflation risk amid rising onion and crude oil prices. $USDINR may rise in the medium-term as the RBI defers hiking rates. Get your market update from @ddubrovskyFX here: https://t.co/lRrlZjAQDw https://t.co/mFv1EOYMjG
  • The $GBP may be on the cusp resuming a 12-year downtrend against the US Dollar as signs of topping emerge at pivotal chart resistance. Get oyur market update from @IlyaSpivak here:https://t.co/9rM3OjWmBA https://t.co/sUWcSFruHw
  • The $NZD may be on average at risk to further losses against its major counterparts such as the US Dollar and Japanese Yen. Where to for NZD/USD and NZD/JPY from here? Find out from @ddubrovskyFX here:https://t.co/OFjePKYdCb https://t.co/eo1c6QAVd8
  • $AUDJPY technical positioning hints prices may be on cusp of turning lower after a late-2019 bounce, recoupling with a dovish RBA policy outlook. Get your market update from @IlyaSpivak here: https://t.co/z84Y0V0ZtH https://t.co/wcIGO1emDw
  • The Japanese Yen has faded into 2020 as market risk appetite has held up and hit demand for haven assets. $USDJPY now challenges a key medium-term downtrend, but hasn’t topped it yet.Get your market update from @DavidCottleFX here:https://t.co/4X6vgCgkB7 https://t.co/FfCkGhtHsm
  • The $USD may fall against the Swedish Krona and Norwegian Krone if commentary from officials at the Davos forum uplift market mood and pressure haven-linked currencies. Get your market update from @ZabelinDimitri here:https://t.co/SZAG0yMu3d https://t.co/cBZj5tC0Ny
  • The $NZD is inching toward support guiding gains in the fourth quarter of 2019. A break may set the stage for long-term bearish trend resumption. Get your market update from @IlyaSpivak here:https://t.co/bnlx4RJ8oV https://t.co/d60YziMYnO
  • $Gld prices are poised to mark the highest weekly-close in nearly seven-years, but the bulls aren’t in the clear yet. Here are the XAU/USD levels that matter next week. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/yeTH6HwncQ https://t.co/6sIpxTSNaX
  • Video https://t.co/PZeqhLumSR
  • The $USD rose as the Singapore Dollar, Malaysian Ringgit and Philippine Peso fell on coronavirus fears. What is the technical outlook for USD/IDR, USD/SGD, USD/MYR and USD/PHP? Find out from @ddubrovskyFX here: https://t.co/G3GmyOe4IT https://t.co/iq7ajeP6iv
GBP/USD Rate Forecast: Rebound Mired by Downward Trending Channel

GBP/USD Rate Forecast: Rebound Mired by Downward Trending Channel

2018-09-05 15:00:00
David Song, Currency Strategist
Share:

British Pound Talking Points

GBP/USD has filled the gap from earlier this week, with the exchange rate snapping the recent series of lower highs & lows, but the broader outlook warns of a further decline as pound-dollar continues to track the downward trending channel from earlier this year.

Image of daily change for major currencies

GBP/USD Rate Forecast: Rebound Mired by Downward Trending Channel

Image of daily change for gbpusd

The limited reaction to the better-than-expected U.K. Services Purchasing Manager Index (PMI) keeps GBP/USD susceptible to further losses, and the uncertainty surrounding the fate of Bank of England (BoE) Governor Mark Carney may continue to rattle the British Pound as U.K. lawmakers mull extending the central bank head’s tenure.

Image of boe rate decision

It seems as Governor Carney intends to lead the BoE through the Brexit process even though his term is set to expire at the end of June 2019, and the recent breakthrough with the European Union (EU) may encourage the central bank to prepare U.K. households and businesses for higher borrowing-costs 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.’

With that said, the Monetary Policy Committee (MPC) may stick to its current course of implementing two rate-hikes per year as ‘any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent,’ but it seems as though the BoE is in no rush to adopt a more aggressive approach in normalizing monetary policy as ‘the MPC continues to recognise that 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.

Image of IG client sentiment

At the same time, the IG Client Sentiment Report still reflects a skew in retail sentiment as 65.0% of traders are net-long GBP/USD, with the ratio of traders long to short at 1.86 to 1. Keep in mind, the retail crowd has been net-long sinceApril 20 when GBP/USD traded near the 1.4050 regioneven though price has moved 8.1%lower since then.The number of traders net-long is unchanged from yesterday and 0.9% lower from last week, while the number of traders net-short is 1.1% higher than yesterday and 11.2% higher from last week.

The ongoing slant in retail positioning provides a contrarian view to crowd sentiment, with the broader outlook for GBP/USD still tilted to the downside as the exchange rate preserves the bearish formation from earlier this year. 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
  • Keeping a close eye on the monthly opening range as GBP/USD snaps the recent string of lower highs & lows, with the near-term outlook capped by the 1.3030 (38.2% expansion) to 1.3090 (38.2% retracement) region.
  • The failed attempt to test the August-high (1.3145) may keep GBP/USD within the bearish structure, but need a close back below the 1.2750 (61.8% expansion) to 1.2800 (50% expansion) area to open up the 2018-low (1.2662), which sits just above the Fibonacci overlap around 1.2630 (38.2% expansion) to 1.2640 (23.6% retracement).
  • Break/close below the stated region the next downside target around 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

News & Analysis at your fingertips.