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.

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
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • Technical indicators are chart analysis tools that can help traders better understand and act on price movement. Learn more about the importance of technical analysis here: https://t.co/NpC1D8y4Aa https://t.co/gaUllv1kra
  • Heads Up:💶 ECB Guindos Speech due at 09:15 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-18
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/9:30 AM GMT as he goes over London #FX & #CFD charts for the next week. Register here: https://t.co/CoMkMA0pdF https://t.co/TBv201f9hp
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/RENalKFdNu
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.33%, while traders in NZD/USD are at opposite extremes with 66.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/iWNOm3LGo4
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.08% Silver: 0.47% Gold: 0.44% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/sjPmNBF4Dr
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/qmkJaNY3wf
  • China flexing their muscles as US look to sell $7bln worth of arms to Taiwan https://t.co/RYV8MnfYvN
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.56% 🇦🇺AUD: 0.13% 🇪🇺EUR: 0.10% 🇨🇦CAD: 0.09% 🇨🇭CHF: 0.04% 🇬🇧GBP: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0Ysc7X6418
  • $USDJPY edging closer to jawboning levels https://t.co/X6Er140Zbt
GBP/USD Technical Analysis: Back to 1.3000, Now What?

GBP/USD Technical Analysis: Back to 1.3000, Now What?

2017-07-21 17:32:00
James Stanley, Strategist
Share:

To receive James Stanley’s Analysis directly via email, please sign up here.

Talking Points:

- GBP/USD Technical Strategy: Mixed longer-term, mixed near-term.

- GBP/USD set a fresh 10-month high earlier in the week; but has since reversed with prices falling back-below the vaulted psychological level of 1.3000.

- If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our IG Client Sentiment.

In our last article, we looked at the bullish break of the bull flag formation in GBP/USD. As we shared, this opened the door to bullish continuation strategies, as a recent influx of hawkish clues pointed to the fact that the BoE might need to look at rate hikes sooner rather than later. At the center of that argument, however, was inflation.

Inflation is the elephant-in-the-room of the British economy at the moment. After the ‘sharp repricing’ in the value of the British Pound around the Brexit referendum and the ensuing dovish campaign from the BoE, the prospect of stronger inflation seemed simply mathematical. As prices in GBP/USD had dropped by more than 20% in a very short period of time, logically, we would see prices beginning to rise for the import-heavy economy. But despite this risk, the BoE remained uber-dovish under the expectation that the risks of Brexit hitting the British economy would far outweigh the risks of stronger inflation.

The brutal slowdown that the BoE was expecting around Brexit hasn’t really shown up. But inflation has continued to rise, and last month saw CPI come in at an annualized 2.9% clip, which had started to create a bit of commotion within the BoE; and at last month’s rate decision, we saw the most votes for a rate hike since 2011 as the MPC voted 5-3 to hold rates flat. In the following weeks, we heard from various members of the BoE that opined that higher rates might be necessary to ward off these stronger inflationary forces. When Mark Carney made similar remarks, warning that rate hikes may be on the horizon for the U.K., the British Pound went into full-bull mode as prices drove above the psychological 1.3000 level.

GBP/USD Four-Hour Chart: Bullish Move Drives Above 1.3000, Albeit Temporarily

GBP/USD Technical Analysis: Back to 1.3000, Now What?

Chart prepared by James Stanley

On Tuesday of this week, U.K. inflation for the month of June was released. Inflation came-in at an annualized 2.6%, falling below the expectation of 2.8%. This seemingly removed a bit of pressure from the situation, as softer inflation can allow the BoE more time before needing to adjust rates. In response to this softer inflation print, the British Pound fell against most major currencies; the U.S. Dollar included even as the Greenback was driving down to fresh yearly lows.

This leaves Cable in a fairly vulnerable state, and this can urge caution for the bullish continuation approach, particularly as the pair trades below the venerable 1.3000 level. Bearish price action has begun to show on the hourly chart as support has been unable to hold. Should the lower-high that printed at 1.3020 remain respected in early trade next week, this can open the door to short-term bearish momentum strategies in the search for a continuation of lower-lows and lower-highs.

Cable Hourly: Bearish Momentum Beginning to Show with Lower High’s and Low’s

GBP/USD Technical Analysis: Back to 1.3000, Now What?

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES