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
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
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
Mixed
USD/JPY
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
More View more
Real Time News
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/9PYqo6tYdK
  • What are the truths and lies of #forex trading regardless of your #tradingstyle here: https://t.co/uF75VPzstr https://t.co/cuH9YESlr2
  • The $SGD is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the SGD and how to trade it. Get your SGD market update from @ddubrovskyFX here:https://t.co/eWLM9XZs5Y https://t.co/HdiCLtSFre
  • #Bitcoin prices may see a pickup in volatility ahead of the 2020 halving as the #coronavirus pandemic threatens to disrupt cross-continental $BTC mining operations. Get your market update from @ZabelinDimitri here: https://t.co/BoH24MVf4P https://t.co/4bgTwNqVvG
  • (Weekly Outlook) The Japanese #Yen faced a mixed week against currencies such as the US Dollar, Euro, British Pound and Canadian Dollar. What is ahead for $USDJPY, $EURJPY, $GBPJPY and $CAD/JPY? - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2020/04/04/Japanese-Yen-Weekly-Forecast-USDJPY-EURJPY-GBPJPY-CADJPY.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/Flgbd5b2ag
  • Foreign exchange – or “#forex” – markets often pay close attention to politics and central bank policy. We offer a model for traders to gauge their impact on exchange rates. Get your market insight from @ZabelinDimitri and @CVecchioFX here: https://t.co/FbXc1Awu6a https://t.co/Qbhs4ndgPa
  • Why must financial market traders monitor both monetary and fiscal policy? Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/AldbSctm9V
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/yF133btXFd https://t.co/Sjnr0iVgAf
  • Upside momentum stalls with the #DAX and #FTSE 100 vulnerable to testing lower levels as the economic backdrop deteriorates further. Get your #equities technical analysis from @JMcQueenFX here: https://t.co/BFIaXTfDcs https://t.co/q0Mso4zWlT
  • RT @iv_technicals: *TRUMP SAYS HE'D USE TARIFFS IF NEEDED TO PROTECT OIL INDUSTRY - BBG #OOTT #WTI $USO
GBP/USD at Confluent Support Ahead of Super Thursday: Will it Hold?

GBP/USD at Confluent Support Ahead of Super Thursday: Will it Hold?

2018-02-07 19:32:00
James Stanley, Strategist
Share:

Talking Points:

- Tomorrow brings Super Thursday from the Bank of England, which means we get a rate decision along with the Quarterly Inflation Report and the press conference with BoE Governor, Mr. Mark Carney.

- Retail traders are currently net short in GBP/USD via IG Client Sentiment, to a tune of 1.18-to-1.

- Are you looking to improve your trading approach? Check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

If you’re looking for longer-term analysis on GBP or USD, click here for our Trading Forecasts.

GBP/USD Pulls Back From Post-Brexit Highs

It’s been a rough past week for the British Pound, as GBP/USD was surging into fresh highs just two weeks ago. While a large portion of that move was being driven by a really weak US Dollar, there was also a theme of strength showing in the Pound as markets were bracing for the prospect of more rate hikes this year. As inflation remains brisk in the UK, with the early stages of wage growth beginning to show, the thought is that the Bank of England will shift to a more-hawkish stance by the end of the year. This has helped to drive Sterling higher against a number of currencies, further reversing the back-breaking weakness that showed up in the wake of the Brexit referendum.

On the topic of Brexit recovery, price action in GBP/USD keeps on chugging. That high that printed a couple of weeks ago came-in right around the 78.6% Fibonacci retracement of the Brexit-move in the pair.

GBP/USD Daily Chart: Resistance Shows at 78.6% Retracement of the Brexit-Move

gbpusd daily chart

Chart prepared by James Stanley

On Monday, we looked at the 61.8% retracement of that same move for reversal plays of this near-term bearish momentum. That support play worked out beautifully as the pair rallied by 150 pips in the day after. But in the midst of that bullish move, another factor began to show, and that was lower-high resistance below the vaulted psychological level of 1.4000.

This leaves the pair in a rather unattractive stance as we approach what could be a really big driver tomorrow in the Bank of England’s Super Thursday.

GBP/USD Hourly: Lower-Lows, Highs as Price Approaches Fibonacci Support

gbpusd hourly chart

Chart prepared by James Stanley

The Big Question Around the BoE

The big question around the Bank of England for tomorrow’s rate decision is just how hawkish the bank might be towards the rest of this year. With inflation remaining well-above the BoE’s target, it’s almost a foregone conclusion that this will need to be accounted for in tomorrow’s Quarterly inflation report. Markets have started to build-in expectations for the possibility of as many as two rate hikes this year, in May and November, each of which are Super Thursday events.

If the Bank of England does take a hawkish tone, it would be quite the twist. The BoE has continually offered a dovish outlook for the British economy, largely on the basis of Brexit, and this even happened in November when the bank hiked rates for the first time in ten years. We even opined on the dovish nature of that rate hike shortly after it happened. But up to this point, the doom and gloom that was forecast by the BoE around Brexit simply has yet to show up. What has shown up in a rather undeniable manner is inflation, so a secondary question here is just how hard the BoE might pivot into a hawkish stance, and the degree to which that happens will likely help to drive flows in the British Pound in the coming weeks.

Price Action Around GBP/USD For Tomorrow

We’re currently sitting at a big area of support, as we have both a Fibonacci level and a channel mid-line in close distance of each other, right around yesterday’s lows. This could be a difficult support level to buy ahead of tomorrow’s Super Thursday as we’ve already seen one solid reaction off of that level this week; but can it produce another?

GBP/USD Daily Chart: Confluent Support From Fibonacci, Channel Mid-Line

gbpusd daily chart 2

Chart prepared by James Stanley

For longer-term strategies

The longer-term bullish trend remains in-force, even despite the pullback that’s shown up over the past couple of weeks. Timing re-entry into that bullish trend is complicated by near-term bearish momentum, but if we do see support hold around the current area, the door remains open for topside exposure.

But – even if we do get a break of current support, there’s another area that may attract attention from buyers, and that’s the prior area of resistance that had come into play in September and then again around the turn of the New Year. This zone runs from the approximate 1.3589 up to the September high of 1.3658 and, as of yet, has not been tested for support. If we do see Sterling break-lower around BoE tomorrow, secondary support in this area can keep the door open for bullish strategies with stops set below the prior swing. This prior swing came-in at the 50% retracement of the move, just below the 1.3500 psychological level in the pair.

GBP/USD Daily Chart with Secondary Support From Prior Swing Highs

gbpusd daily chart 3

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on GBP/USD? Our DailyFX Forecasts for Q1 have a section specifically for GBP/USD. We also offer a plethora of resources on our GBP/USD page, and traders can stay up with near-term positioning via our IG Client Sentiment Indicator.

--- 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

News & Analysis at your fingertips.