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
Mixed
Oil - US Crude
Bearish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • Happy Monday traders! What does the new month bring? Are we looking at positive sentiment but not much momentum❔ What are the market highlights heading into New York open? Find out from @DailyFX Chief Strategist, @JohnKicklighter 👇 https://t.co/xaHZXjZdZr
  • US Treasury Secretary Steven Mnuchin to hold call with G-7 finance ministers on Wednesday per his public schedule $DXY
  • Overlay that with google search terms for “protest” and “riots” and you see a similar uptick. Last time we saw a surge in these search terms was back in August 2019 and we saw a lot of volatility ensue shortly after. https://t.co/ZXAkgRWfAB
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.48% 🇳🇿NZD: 1.14% 🇨🇦CAD: 0.98% 🇯🇵JPY: 0.20% 🇪🇺EUR: 0.19% 🇨🇭CHF: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/q8shAF6mG4
  • #IBEx35: a punto de romper el rango para situarse en los niveles previos a la crisis #trading https://t.co/H9DbLtpdox
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Germany 30: 2.12% FTSE 100: 1.61% France 40: 1.56% Wall Street: 0.42% US 500: 0.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/M3rd9RjKa0
  • EUR/JPY Forecast: Euro vs JPY Price Flirts With 120.00 Threshold More details in the link: https://www.dailyfx.com/forex/technical/home/analysis/eur-jpy/2020/06/01/EURJPY-Forecast-Euro-vs-JPY-Price-Flirts-With-120.00-Threshold-MK.html?CHID=9&QPID=917714 https://t.co/Hh9ZAi5YX4
  • 🇲🇽 Markit Manufacturing PMI Actual: 38.3 Previous: 35 https://www.dailyfx.com/economic-calendar#2020-06-01
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Silver: 1.73% Gold: 0.30% Oil - US Crude: -0.96% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/yeKhOfigUX
  • Heads Up:🇲🇽 Markit Manufacturing PMI due at 14:30 GMT (15min) Previous: 35 https://www.dailyfx.com/economic-calendar#2020-06-01
Sterling (GBP) Latest: GBPUSD, GBPJPY Rattled by One Bad Apple

Sterling (GBP) Latest: GBPUSD, GBPJPY Rattled by One Bad Apple

2019-01-03 09:32:00
Nick Cawley, Strategist
Share:

Sterling Roiled by Risk-Off Move in Illiquid Market

  • GBPUSD slumps to a 21-month low.
  • GBPJPY drops seven big figures as stop-losses dissolve.

See how our Q1 2019 Trading Forecasts for GBP can help you when trading.

If you are interested in trading, or just curious about how and why market moves occur, we have recently produced a new guide – How to Start Trading: Top Tips and Guides for Beginners – to help you.

Sterling (GBP) Losses May Provide Short-Term Opportunities but Beware Brexit

The first mini-crash of the year, sparked by a downbeat sales assessment from tech giant Apple, sent a wide variety of risk-on currencies sharply lower, while the Japanese Yen picked up a massive bid. Apple warned that its iPhone sales to China would be lower than anticipated, pointing to ‘rising trade tensions’ between China and the US. The news broke around the same time as the US – Asia rollover when FX liquidity is at its thinnest, leaving the market vulnerable to sharp moves. Currencies that wouldn’t normally be affected directly by Apple’s woes – GBP for example – were caught in the cross-fire as sellers dominated market moves. GBPUSD fell to below 1.2450, a 21-month low, while GBPJPY shed five big figures in a matter of a couple of hours – and seven big figures on the day - and hit a fresh two-year low.

Flash crashes can offer market opportunities, especially indiscriminate selling of other currencies on crosses. Sterling seems to have been caught in the cross-hairs and may offer short-term opportunities. While potential near-term rebounds exist, notably in GBPJPY, the upcoming Brexit bill vote in the week commencing January 14, will continue to drive Sterling’s longer-term moves.

GBPUSD remains negative but a short-term rebound to the 1.2630 – 1.2660 area cannot be discounted. The RSI indicator is mid-market and does not indicate an oversold market, while the pair trade below all three moving averages. Longer-term horizontal support is seen around 1.2360 (April 2017) and 1.2109 (March 2017).

GBPUSD Daily Price Chart (March 2018 – January 3, 2019)

Sterling (GBP) Latest: GBPUSD, GBPJPY Rattled by One Bad Apple

IG Client Retail confirms a negative picture for the GBPUSD. Retail are 75.1% net-long the pair, a bearish contrarian indicator. In addition, the number of traders net-long is 38.4% higher than yesterday and 22.9% higher from last week, while the number of traders net-short is 28.2% lower than yesterday and 24.3% lower from last week, giving us a stronger bearish contrarian trading bias.

GBPJPY on the other hand is currently in heavily oversold territory, according to the RSI indicator, and may be due for a short-term rally. The seven-point fall on the day saw the pair hit levels last traded back in November 2016. A break back above the old April 2017 swing-low at 135.60 should open the way for the pair to re-trace back to 138.60, the old June 2017 swing-low.

GBPJPY Daily Price Chart (March 2018 - January 3, 2019)

Sterling (GBP) Latest: GBPUSD, GBPJPY Rattled by One Bad Apple

What is your view on GBPUSD or GBPJPY – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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

DISCLOSURES

News & Analysis at your fingertips.