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
Bullish
GBP/USD
Bullish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Mixed
More View more
Real Time News
  • #KRW, #JPY and the #PHP are expected to be the most active Asian currencies vs #USD with 1-week implied volatilities at 7.87, 5.86 and 5.64 respectively
  • $GBP: An important opinion poll ahead of Thursday’s UK General Election has raised the chances of a “hung” Parliament, with neither the ruling Conservative Party nor the opposition Labour Party winning an overall majority. More from @MartinSEssex here:https://t.co/Ca76jUTQcl https://t.co/XJuX4UcZlG
  • Over the past 30 days, #NZD has been the best performing G10 currencies vs. USD with 4.03% spot-returns while #JPY has been the worst with 0.41%
  • The Australian Dollar and New Zealand Dollar soared after the Fed rate decision. This leaves AUD/USD and NZD/USD face trend-defining resistance. Follow-through may have to wait $AUDUSD $NZDUSD #Fed - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2019/12/12/AUDUSD-and-NZDUSD-Rates-Soar-on-the-Fed-Powell-to-Resistance.html?CHID=9&QPID=917702 https://t.co/hrfuX64Oxp
  • 🇬🇧 GBP RICS House Price Balance (NOV), Actual: -12.0% Expected: -5.0% Previous: -6.0% https://www.dailyfx.com/economic-calendar#2019-12-12
  • 🇦🇺 AUD Consumer Inflation Expectation (DEC), Actual: 4.0% Expected: N/A Previous: 4.0% https://www.dailyfx.com/economic-calendar#2019-12-12
  • 🇬🇧 GBP RICS House Price Balance (NOV), Actual: -12 Expected: -5.0% Previous: -5.0% https://www.dailyfx.com/economic-calendar#2019-12-12
  • 🇯🇵 JPY Machine Orders (YoY) (OCT), Actual: -6.1% Expected: -1.9% Previous: 5.1% https://www.dailyfx.com/economic-calendar#2019-12-11
  • Heads Up:🇬🇧 GBP RICS House Price Balance (NOV) due at 00:01 GMT (15min), Actual: N/A Expected: -5.0% Previous: -5.0% https://www.dailyfx.com/economic-calendar#2019-12-12
  • Heads up: UK’s RICS House Price Balance (NOV) is due at 0:01 GMT (15 min) Est: -5.0% Previous: -5.0% #GBP
GBP/USD – The 8-Year Cycle Revisited

GBP/USD – The 8-Year Cycle Revisited

2016-02-24 16:00:00
Kristian Kerr, Sr. Currency Strategist
Share:

Price & Time covers key technical themes daily and can be delivered to your inbox each morning by joining the distribution list: Price & Time

Talking Points

  • 8-year cycle pulling GBP/USD lower?
  • 2009 lows at risk

GBP/USD – The 8-Year Cycle Revisited

GBP/USD – The 8-Year Cycle Revisited

The chart above shows a fairly clear 8-year low to low cycle in GBP/USD. The 8 to 9 year cycle is one of my idealized intervals as it fits well with the Martin Armstrong Pi cycle and other geometric concepts. A few things really stand out to me when I look at the chart above. The first is that the upward portion of these low to low cycles tend to last around 5 to 7 years. I actually wrote about this long-term phenomenon about three years ago and suggested that Cable probably had another serious move higher in it before heading down into the 2017/2018 timeframe because of the historical tendency for advances to last more than half the full low-to-low cycle. This is pretty much, what we got as the high in July of 2014 occurred a little after 5 years from the important cyclical low in 2009 and fits nicely with the historical averages. More importantly, it also argues that GBP/USD is in the tail end of this cycle and should head generally lower into the latter part of next year/first part of 2018, which coincidentally aligns with other long-term relationships.

The other big takeaway I get from the chart is the clear resemblance of the current cycle with that of the one in the 1990’s. Both occurred after sharp declines in the pound because of crisis (ERM and GFC) and both had relatively minor recoveries of less than 30%. If GBP/USD continues to follow the 1990’s cyclical, analog it argues that the decline over the next year or two should not really extend more than a few big figures beyond the 2008 low around 1.3500. It also suggests that there will be a couple of decent counter trend advances as it works lower. We shall see. Mark Twain is credited with saying, “History doesn’t repeat itself, but it does rhyme”. I think the clear risk heading into the end of the cycle in 2018 (because of the confluence of other important timing relationships at the same time) is that the analog with 1990’s begins to break and we get more aggressive weakness like in other episodes.

Get DailyFX’s top trading opportunities of 2016 HERE

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter @KKerrFX

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

DISCLOSURES

News & Analysis at your fingertips.