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British Pound (GBP) Latest: GBP/USD Hammered, FTSE 100 Soars as Central Banks Circle

British Pound (GBP) Latest: GBP/USD Hammered, FTSE 100 Soars as Central Banks Circle

2020-03-02 09:07:00
Nick Cawley, Analyst
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Sterling (GBP) and FTSE 100 Prices, Analysis and Charts

  • Volatile open to the week as market’s mull central bank intervention.
  • UK-EU trade talks start today with neither side in the mood to shift.

Financial Markets Being Driven by Central Banks Flexing Their Muscles

Another volatile start to the week with equity markets reversing weekend losses as central banks around the globe mull boosting liquidity measures in an effort to stem last week’s coronavirus sell-off. The Federal Reserve said on Friday that it would act if necessary, to protect the US economy, while the Bank of Japan said that it would stabilize markets by offering ‘sufficient liquidity via market operations and asset purchases.’ And early Monday, the Bank of England (BoE) said that it was ready to take all steps needed to protect financial stability, a central remit of the BoE but one that will provide reassurance for the market during these volatile times.

GBP/USD slipped below 1.2800 post-BoE statement and continues to near the important 200-day moving average, currently at 1.2712. Last Friday’s blow-out down to 1.2725 may well be a sign of things to come, and be revisited, although the pair are currently trading in heavily oversold territory which may slow down any further sell-off. As with all markets, coronavirus news and central bank action will be key.

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GBP/USD Daily Price Chart (September 2019 – March 2, 2020)

chart showing gbpusd falling sharply
GBP/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -8% -2% -5%
Weekly -25% 71% 3%
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For all market moving data and events, see the DailyFX Calendar.

The FTSE 100 is extremely whippy, with the UK benchmark hitting a low of 6,435 over the weekend before rallying sharply in early trade today. The technical set-up for the FTSE chart remains negative but traders need to be aware that central bank action, which can happen at any time, will drive markets in the short-term. The average true range indicator at the bottom of the chart, highlights the current market volatility.

FTSE 100 Daily Price Chart (April 2019 – March 2, 2020)

chart showing ftse 100 rebound after heavy fall

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on Sterling (GBP) and the FTSE 100 – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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

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