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
Real Time News
  • Pre-FOMC US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/JPY https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/09/21/Pre-FOMC-US-Dollar-Price-Action-Setups-EUR-USD-EURUSD-GBP-USD-GBPUSD-USD-JPY-USDJPY.html https://t.co/Vyj5hwVXpi
  • The big question is whether the Fed announces taper tomorrow or whether they punt that announcement to the November rate decision, waiting for employment data to improve to the point of ‘significant further progress. More market update from @JStanleyFX :https://t.co/tPoLyqNFc1 https://t.co/o3ES0KKlWr
  • SEC Chair Gensler: - The market is in a better position to absorb global shocks - Securities rules give the SEC great power over crypto
  • feels like we haven't had one of these in quite a while https://www.dailyfx.com/webinars/643096611 Pre-FOMC Price Action Setups, starting right at 1pm, top of the hour 1. USD PA setups 2. Evergrande worries 3. Stonks - fly or die? https://t.co/VF15XbuuJS
  • That all said, staying patient and not chasing is prudent here imo. Tomorrow will likely be better for assessing short-term directional bias (China markets open again following holiday, post-FOMC).
  • Also, S&P Global put out a report overnight that said China would likely step in to curb “far-reaching contagion” re: Evergrande. The House is scheduled to vote on a stopgap funding bill Tuesday, which might be alleviating some investor angst around the debt ceiling as well.
  • Encouraging we recoiled higher off yesterday’s closing level. Could the pre-FOMC drift be at work? Markets were priced for potential hawkish shift and increased odds of taper timeline announcement. Perhaps seeing an unwind of that in light of recent market developments.
  • Join @JStanleyFX at 13:00 EST/17:00 GMT for a webinar on trading price action. Register here: https://t.co/O5PPiQXZKs https://t.co/pXMRUCl53G
  • USD/CAD snaps the recent series of higher highs and lows after struggling to test the August high (1.2949). Get your $USDCAD market update from @DavidJSong here:https://t.co/chaVL0iSIQ https://t.co/Bj7emg2s8n
  • S&P 500 update. Here are the tactical levels on my radar. Important to note that overnight bids have been consistently faded this month. Seeing more of the same so far today. This is a considerable change in market behavior and speaks to risk-off undercurrents. #Stocks $SPX $ES https://t.co/fpDm0WO21h https://t.co/mi3V3uesnF
GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

James Stanley, Senior Strategist

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

Talking Points:

- The British Pound is heading-lower after another disappointing inflation report.

- Cable is moving-down to an area of potential support around the July low, and this zone can assist with both long and short-side approaches.

- 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 British Pound after a dovish Bank of England meeting sent the currency lower from fresh 2017 highs. The Non-Farm Payrolls report that took place a day later helped with the bearish move, as a short squeeze in the U.S. Dollar helped to drive prices in GBP/USD down to the psychological level of 1.3000. But as British data continued to disappoint through last week, that 1.3000 level gave way, eventually becoming resistance and continuing to show as such until we walked into the most recent U.K. inflation report this morning.

In that inflation report, prices did not rise as much as feared: U.K. inflation came-in 2.6% for the month of July, matching the June print and below the expectation of 2.7%. As we had seen with the June data, this tamer read of inflation removes some pressure from the Bank of England, who are potentially looking at ‘one and done’ rate hikes in the effort of quelling those rising prices. The near-instantaneous response from markets after that inflation print came-in was a drop in GBP, as GBP/USD fell through the previous support floor, as well as the 50% Fibonacci retracement of the most recent bullish move.

GBP/USD Four-Hour: Cable Falls Through Support Following U.K. CPI

GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

Chart prepared by James Stanley

This bearish move in GBP/USD has brought the pair closer to a longer-term bullish trend-line, which can be found by connecting the March and June lows. Just a bit below this trend-line, we have another key level around the 1.2800-handle, as the prior test of support aligns with the 38.2% retracement of this major move (highlighted in blue, below).

GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

Chart prepared by James Stanley

Given the veracity of recent declines, for those that are looking to play the long side of the pair, awaiting support around this trend-line down to 1.2826 is crucial. We previously discussed how traders can use price action to confirm support and resistance; and in this situation of traders looking to play a short-term reversal into the intermediate-term trend, patience is of the upmost importance in ensuring that support actually shows in this zone before looking to get long.

This zone of potential support can also assist with the short-side continuation approach. For those that are looking at taking on bearish exposure, a break of this zone can open the door for such plays, with traders looking for a break of the July low before entertaining options for bearish exposure. Upon a break of this support, traders can look to re-assign this area as resistance, looking to sell off of the zone around 1.2809 with anticipation of further lows (shown in green on the below chart).

Conversely, if the low around 1.2809 is not taken out, traders can look to play resistance off prior support (shown in red, below), between 1.2928-1.2955. If resistance shows in this zone, traders can look to place stops above the prior swing-high, around 1.3032 in anticipation of bearish continuation.

GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

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