Sterling (GBP) Price Nudges Lower But Chart Positive pre-FOMC
GBPUSD Technical Analysis
- 200-day moving average turns into support.
- Brexit talks continue but Sterling traders looking elsewhere.
Sterling Pauses but Sets its Sights Higher
Sterling set the market alight Tuesday, rallying by around 1% against a range of currencies as talk filtered through that Brexit negotiations in Brussels may be making progress. GBPUSD was also helped by a weak US dollar after various Fed speakers dampened further rate hike expectations and questioned if it was necessary to continue with balance sheet normalization. In addition, GBP gained strength from robust UK jobs and wages data which will push the Bank of England towards tightening monetary sooner rather than later if Brexit is resolved. GBPUSD may also get an uplift later today if, as expected, the Fed repeat that US interest rates are unlikely to rise anytime soon and that any future moves remain data dependent.
GBPUSD touched a two-week high around 1.3075 yesterday and has faded slightly lower in early turnover today. Yesterday’s move saw resistance from the 200-day moving average broken with ease, leaving 38.2% Fibonacci retracement at 1.3177 and the January 25 high of 1.3220 as the next upside targets. To the downside, 1.2970 ahead of the 200-day ma at 1.2945 and a cluster of support around 1.2890.
GBPUSD Daily Price Chart (April 2018 - February 20, 2019)
IG Client Sentimentshows that retail traders are undecided on GBPUSD with the ratio of traders long- to short balanced at 50/50. Recent changes in holdings however suggest that GBPUSD may move higher.
--- Written by Nick Cawley, Analyst
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