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
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Mixed
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 1.60% Oil - US Crude: 0.79% Gold: 0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/f6xT4Uo2tO
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.20% 🇦🇺AUD: 0.13% 🇬🇧GBP: 0.08% 🇨🇭CHF: -0.03% 🇨🇦CAD: -0.05% 🇯🇵JPY: -0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/co2JkXN1A9
  • LIVE NOW: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.08%, while traders in France 40 are at opposite extremes with 89.09%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/spZkZaPsuM
  • AUD/USD Technical Analysis: September Floor Back Under Fire - https://www.dailyfx.com/forex/technical/home/analysis/aud-usd/2019/09/23/AUDUSD-Technical-Analysis-September-Floor-Back-Under-Fire.html?utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #AUDUSD #technicalanalysis
  • LIVE IN 30 MIN: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • $AUD watchers should keep a close eye on iron ore prices. They fell sharply last month, albeit from very high levels. Get your market update from @DavidCottleFX here: https://t.co/pEY7SReQ7R https://t.co/da6P4i4qBL
  • Tune in to @IlyaSpivak 's #webinar at 10:00 PM ET/2:00 AM GMT for insight on the cross market weekly outlook. Register here: https://t.co/E213bTtq5C https://t.co/QEgLPbz9Xp
  • RT @KyleR_IG: #ASX jumps half-a-per-cent this morning, as China's Vice Agriculture Minister states that last week's cancelled visit by a Ch…
  • #EURJPY pivot points (daily) – S3: 116.5, S2: 117.87, S1: 118.21, R1: 119.13, R2: 119.72, R3: 120.64 - https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
GBPUSD Outlook: Sterling Makes Significant Shift to the Downside

GBPUSD Outlook: Sterling Makes Significant Shift to the Downside

2019-02-06 10:30:00
Martin Essex, MSTA, Analyst and Editor
Share:

GBP price, news and analysis:

  • The ever-decreasing prospect of a UK interest rate hike by the Bank of England is weakening the British Pound following poor economic data.
  • The Bank will likely wait for both an economic pickup and more certainty about Brexit before even considering tightening UK monetary policy.

Sterling undermined by weak UK economy

GBPUSD has dropped below the psychologically important 1.30 level and looks set to weaken further after making a decisive break below the support line of a bearish rising wedge pattern on the daily chart to its lowest level for two weeks.

GBPUSD Price Chart, Daily Timeframe (November 23, 2018 – February 6, 2019)

Latest GBPUSD price chart.

Chart by IG (You can click on it for a larger image)

The Pound has been undermined over the past week by survey data suggesting the UK economy is now spluttering. The purchasing managers’ index for the UK manufacturing sector, released last Friday, showed a fall in January to 52.8 from 54.2 – well below the predicted 53.5.

That lack of momentum was emphasized Monday by a weaker than expected construction PMI and again Tuesday by the service-sector PMI, which showed a drop from 51.2 to 50.1 – below the forecast 51.0, only a whisker above the 50 level separating expansion from contraction and the lowest for 2-1/2 years.

This suggests the Bank of England will be in “wait and see” mode when it makes its next interest-rate decision Thursday and will be in no hurry to raise rates for the rest of this year.

Brexit talks still stalled

As for Brexit, UK Prime Minister Theresa May will visit Brussels Thursday in yet another attempt to reach a deal but no breakthrough is expected and that too will likely prevent a significant recovery in GBP. A poll by the Reuters news agency released Wednesday showed respondents predicting that sterling will gain between 2% and 5% if the UK parts ways with the EU with a divorce deal but will slide between 5% and 10% in the event of a disorderly Brexit.

More to read:

A Beginner’s Guide to the Bank of England

GBP News and Analysis

British Pound: What Every Trader Needs to Know

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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

DISCLOSURES

News & Analysis at your fingertips.