British Pound Outlook: GBP/USD, GBP/JPY and GBP/AUD
- Dollar strength pushes GBP/USD back toward the sub-1.2200 area.
- Japanese Yen weakness needs to be watched for any signs of official intervention.
- Australian dollar weakens despite RBA rate hike.
UK growth flatlined in Q3, according to the latest ONS data, compared to Q2. Services output fell by 0.1%, production growth flat-lined and construction grew by 0.1%.
GBP Breaking News: 0% Growth for the UK in Q3
For all market-moving economic data and events, see the DailyFX Calendar
Sterling remains vulnerable against the US dollar for now with the pair resting just above 1.2200. A couple of simple moving averages have been in play this week with a break of the 50-dsma quickly reversed while the 20-dsma is currently acting as support. If the short-dated moving average fails to hold, a cluster of recent lows and the 78.6% Fibonacci retracement, all around the 1.2090 area, will come into play. Resistance is seen between 1.2303 and 1.2313 (61.8% Fib).
Retail trader data shows 69.34% of traders are net-long with the ratio of traders long to short at 2.26 to 1.The number of traders net-long is 1.94% higher than yesterday and 0.49% higher than last week, while the number of traders net-short is 9.54% lower than yesterday and 12.83% lower than last week.
How are GBP/USD Traders Currently Positioned and What Does it Mean for Price Action
| Change in | Longs | Shorts | OI |
| Daily | -8% | -7% | -7% |
| Weekly | -13% | 9% | -4% |
The Japanese Yen continues to weaken with the Bank of Japan seemingly sitting on the sidelines for now. The BoJ has made little to no attempt to bolster the Yen and while it is dangerous to try and second guess the Japanese central bank, it looks as though they are comfortable with current levels. Any intervention could produce a sharp snap-back and Yen traders should keep tight stops in place.
GBP/USD is looking to re-test levels last seen eight years ago with 186.76 the level to watch. A break above here moves the pair into unchartered territory with the November 2015 high at 188.81 the next level of horizontal resistance. Above here, 195.88 comes into play. The 20-dsma has crossed through the 50-dsma, adding to the bullish impulse. First-line support is seen at 184.01 but that may not hold if the BoJ intervenes.
GBP/JPY Daily Price Chart
The Reserve Bank of Australia hiked interest rates by 25 basis points at the start of the week in a renewed effort to control above-target inflation. While there had been growing expectations that the Australian central bank would hike rates, the announcement caused the Australian dollar to fall and this weakness continued during the rest of the week. GBP/AUD is currently pressing against both the 20- and 50-simple moving averages and trying to move higher. The 1.9330-1.9340 level is the next level of short-term resistance, while support is seen between 1.8852 and the 200-dsma at 1.8834.
GBP/AUD Daily Price Chart
Charts using TradingView
What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
