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
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • The recent surge in the Treasury market has pushed the benchmark 10Y yield back above the S&P 500 dividend yield https://t.co/x28BFkmjNv
  • S&P 500 on the verge of getting separation from March trend-line. Nasdaq 100 below March trend-line, triggering H&S pattern. Get your #equities market update from @PaulRobinsonFX here:https://t.co/quhMgBpoiq https://t.co/n0jtTnVNwl
  • Japanese Gov't recommends 2-week extension of Tokyo virus emergency - BBG $JPY
  • While the rise in yields is weighing on risk trends, carry trade didn't seem to take the hit. In fact, the charge in US yields seems to have far outweighed the de-risking from $USDJPY's perspective: https://t.co/KpOpgopOep
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: -0.09% 🇬🇧GBP: -0.40% 🇦🇺AUD: -0.69% 🇳🇿NZD: -0.81% 🇯🇵JPY: -0.90% 🇨🇭CHF: -0.97% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/8Tvotykz9y
  • Commodities Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.33% Gold: -0.69% Silver: -2.64% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/faJTbi16VK
  • AUD/USD now off daily lows, remains much weaker as a result of broad US Dollar strength $AUDUSD https://t.co/OkdKWbepAR
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.13%, while traders in GBP/JPY are at opposite extremes with 70.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/XXOjh5LmaB
  • Silver price action stalls between Moving Averages. Platinum prices currently confined by Fibonacci Support. Get your market update from @Tams707 here:https://t.co/Nbl8FDmfps https://t.co/VyuZzP8w2q
  • US Markets at the Close $NDX 12464.0 -1.73% $SPX 3768.49 -1.34% $DJI 30924.14 -1.11%
GBPUSD Clouded with Mixed Signals as UK Prepares for Snap Election

GBPUSD Clouded with Mixed Signals as UK Prepares for Snap Election

David Song, Strategist

British Pound Talking Points

GBPUSD claws back from a fresh 2019-low (1.1958) as the UK House of Commons takes control of Parliament to avoid a no-deal Brexit, but the near-term outlook remains clouded with mixed signals as the Relative Strength Index (RSI) snaps the bullish formation from the previous month.

GBPUSD Clouded with Mixed Signals as UK Prepares for Snap Election

GBPUSD may stage a larger rebound over the coming days even though Prime Minister Boris Johnson prepares for a snap election as UK lawmakers take unprecedented steps to secure a trade deal.

With less than 60 days left until the October 31 deadline, headlines surrounding Brexit may continue to sway the outlook for GBPUSD, and it remains to be seen if the Bank of England (BoE) will adjust the forward guidance for monetary policy at the next meeting on September 19 as Governor Mark Carney insist that “the monetary policy response to No Deal would not be automatic.

In turn, the BoE may continue to endorse a wait-and-see approach as “increased uncertainty about the nature of EU withdrawal means that the economy could follow a wide range of paths over coming years,” but the Monetary Policy Committee (MPC) may keep the door open to implement higher interest rates as the “central projection conditioned on prevailing asset prices and a smooth Brexit, GDP was projected to accelerate to robust growth rates from the second half of 2020.”

With that said, the BoE may ultimately stick to the same script, but retail sentiment remains skewed even though GBPUSD slips to a fresh yearly low during the first week of September.

Image of IG client sentiment for GBPUSD

The IG Client Sentiment Report shows73.7%of traders are still net-long GBPUSD compared to 72.0% last week, with the ratio of traders long to short at 2.81 to 1.

In fact, traders have remained net-long since May 6 when GBPUSD traded near the 1.3100 handle even though price has moved 7.6% lower since then.The number of traders net-long is 3.2% lower than yesterday and 18.5% higher from last week, while the number of traders net-short is 3.8% higher than yesterday and 18.4% lower from last week.

The decline in net-short interest points to profit taking behavior as GBPUSD trades to a fresh yearly low in September, but the persistent tilt in retail position offers a contrarian view to crowd sentiment as the exchange rate continues to track the bearish trend from earlier this year.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

GBP/USD Rate Daily Chart

Image of gbpusd daily chart

Source: Trading View

  • Keep in mind, the broader outlook for GBP/USD is no longer constructive as the exchange rate snaps the upward trend from late last year after failing to close above the Fibonacci overlap around 1.3310 (100% expansion) to 1.3370 (78.6% expansion).
  • Recent developments in the Relative Strength Index (RSI) brings the downside targets back on the radar as the oscillator snaps the bullish formation from the previous month, but the failed attempt to break/close below the Fibonacci overlap around 1.1890 (61.8% expansion) to 1.1950 (78.6% expansion) may generate a short-term rebound as the exchange rate struggles to extend the series of lower highs and lows from the previous week.
  • As a result, a closing price above the 1.2100 (61.8% expansion) handle may spur a run at trendline resistance, with the next area of interest coming in around 1.2240 (61.8% expansion).

For more in-depth analysis, check out the 3Q 2019 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 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES