Skip to content
News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Sterling Tech Forecast: GBP/USD Jumps During Powell Speech

Sterling Tech Forecast: GBP/USD Jumps During Powell Speech

Warren Venketas, Analyst

GBP/USD Analysis:

  • GBP/USD jumped during Powell speech but pulled back modestly thereafter
  • Cable set to continue its largely sideways grind this coming week
  • IG Client Sentiment: Massive jump in weekly short positioning muddies sentiment reading
Advertisement

Powell Speech Produces Short-lived Volatility

Fed Chairman, Jerome Powell conducted his virtual address at the Jackson Hole Economic Symposium on Friday where he reaffirmed the FOMC’s committed stance to supporting the economic recovery.

Powell repeated the narrative that inflationary pressures are transitory and have shown signs of stabilizing, while the labor market continues to improve but remains short of the Fed’s goals for now.

During Powell’s address and in the moments that followed, GBP/USD shot higher but backtracked slightly as volatility proved to be short-lived.

GBP/USD 5 Minute Chart

gbp/usd 5 minute chart

Chart prepared by Richard Snow, IG

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Warren Venketas
Trading Forex News: The Strategy
Get My Guide

GBP/USD Outlook: Neutral

The daily chart remains supportive of largely sideways movement in the absence of any significant economic data apart from the US NFP report on Friday.

Should Friday’s jump spill over into the coming week, there would need to be a break above the 1.3780 as the immediate level of resistance, which would leave quite the challenge to approach the 1.3920 level.

If the dollar starts the week on the a positive note, GBP/USD would see 1.3670 as the nearest level of support with the 23.% Fib level (drawn from the March 2020 low to the 2021 high) at 1.3580 as the next significant level of support.

GBP/USD Daily Chart

gbp/usd daily chart

Chart prepared by Richard Snow, IG

Massive Jump in Weekly Short Positioning Muddies Sentiment Reading

Chart prepared by Richard Snow, IG

  • GBP/USD: Retail trader data shows 64.39% of traders are net-long with the ratio of traders long to short at 1.81 to 1.
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.
  • However, a massive increase in weekly short positioning (21.6%) has resulted in a mixed GBP/USD trading bias despite nearly 65% of traders holding longs
How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Warren Venketas
Learn How to Analyze Retail Trader Positions
Get My Guide

--- Written by Warren Venketas for DailyFX.com

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

DISCLOSURES