Never miss a story from David Song

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

British Pound Talking Points

GBP/USD pulls back from a fresh weekly-high (1.3087) even as Bank of England Governor Mark Carney extends his tenure until the end of January 2020, and the pound-dollar exchange rate may continue to consolidate ahead of the central bank meeting on September 13 as the Monetary Policy Committee (MPC) is widely expected to keep the benchmark interest rate on hold.

Image of daily change for major currencies

Wait-and-See Bank of England (BoE) to Offer GBP/USD Little Relief

Image of daily change for gbpusd

The British Pound is back under pressure following the limited reaction to the U.K. Employment report, and GBP/USD may continue to face headwinds over the remainder of the week if the BoE tames bets for an imminent rate-hike.

Image of bank of england interest rate decision

Despite growing hopes for an imminent Brexit deal, the MPC may merely stick to the same script as ‘any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent,’ and the central bank may largely endorse a wait-and-see approach for the remainder of the year after delivering a 25bp rate-hike at its last meeting in August.

Unless the BoE shows a greater willingness to deliver another rate-hike in 2018, the British Pound may find little relief following the meeting, with more of the same from Governor Carney & Co. likely to dampen the appeal of Sterling as it seems as though the MPC will stick to its current course of delivering two rate-hikes per year.

Image of IG client sentiment

Keep in mind the IG Client Sentiment Report continues to show a skew in retail sentiment as 66.3% of traders are net-long GBP/USD, with the ratio of traders long to short at 1.97 to 1. The retail crowd has been net-long sinceApril 20 when GBP/USD traded near the 1.4050 regioneven though price has moved 7.8%lower since then. The number of traders net-long is 3.7% lower than yesterday and 17.2% lower from last week, while the number of traders net-short is 5.6% lower than yesterday and 29.7% lower from last week.

The recent updates highlight waning interest ahead of the BoE meeting, but the persistent slant in retail positioning continues to offer 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 range ahead of the BoE meeting as GBP/USD appears to be making another attempt to test the August-high (1.3145), but the lack of momentum to close above the 1.3030 (38.2% expansion) to 1.3090 (38.2% retracement) region may keep the exchange rate within the downward trending channel from earlier this year.
  • Need to see a move below the 1.2890 (50% expansion) to 1.2950 (23.6% expansion) region to open up the Fibonacci overlap around 1.2750 (61.8% expansion) to 1.2800 (50% expansion), with the next downside region of interest coming in around 1.2630 (38.2% expansion) to 1.2640 (23.6% retracement), which sits just beneath the 2018-low (1.2662).

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

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.