GBPUSD Price: Giving Back Gains Ahead of Fed Powell's Speech
Brexit and GBPUSD Price, Chart and Analysis:
- Sterling jumps on renewed Brexit hope.
- Jerome Powell speaks at Jackson Hole Symposium.
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Sterling’s Brexit Boost Fading Ahead of a Long Weekend
GBPUSD touched a near one-month high of 1.2274 yesterday after French President Emmanuel Macron followed in German Chancellor Angela Merkel’s steps and suggested that a Brexit deal could be done before October 31. Sterling jumped by over one-and-a-half cents against the US dollar as short-covering pushed the pair sharply higher. This is the second time this week that Sterling has jumped by around 100 pips on just a suggestion that a Brexit deal may be done, indicating that the market is short of Sterling and stop-losses are getting filled. Last week’s CoT report showed that speculative traders remain heavily short of Sterling although the number was marginally lower than the week before.
GBPUSD traders will now look to the Jackson Hole Symposium where Fed chair Jerome Powell will be speaking at 14:00 GMT. This Wednesday’s FOMC minutes were inconclusive with some members voting for rates to remain at current levels while 2 Fed members were looking to cut rates by 50 basis points. Powell’s speech today may give the market some clarity on the future path of interest rates.
As we go into a long weekend in the UK, GBPUSD is trading just above 1.2200 and is overbought according to the CCI indicator. A break above Thursday’s high at 1.2273 would open the way to 1.2375, filling the gap on the July29 sell-off candle. To the downside, 1.2100 remains in focus before the recent multi-month at 1.2015, made on August 12.
GBP/USD Price Chart (November 2018 – August 23, 2019)
Retail traders are 68.7% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. However recent daily and weekly positional changes suggest that prices may soon reverse higher despite traders being net-long GBPUSD.
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