Skip to Content
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.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
British Pound Week Ahead: GBP/USD Stumbles, EUR/GBP Tests Support, BoE on Tap

British Pound Week Ahead: GBP/USD Stumbles, EUR/GBP Tests Support, BoE on Tap

Nick Cawley, Senior Strategist

Share:

What's on this page

GBP/USD and EUR/GBP - Prices, Charts, and Analysis

  • Bank of England (BoE) is expected to hike rates by 25bps.
  • Cable slips after US NFPs but from a lofty level.
  • EUR/GBP testing range support.
GBP Forecast
GBP Forecast
Recommended by Nick Cawley
Get Your Free GBP Forecast
Get My Guide

The Bank of England is expected to raise the Bank rate by a further 25 basis points next Thursday as part of an ongoing effort to combat super strong and sticky UK inflation. UK headline inflation (10.1%) remains in double-digit territory for the seventh month in a row, while UK inflation of 6.2% is just 0.3% away from the multi-decade high of 6.5% seen in September and October last year. For all the talk that UK inflation will fall away quickly as we head into the second half of the year, there’s nothing, as yet, to be positive about.

UK Headline Inflation

image1.png

As always, what Governor Bailey says in his post-decision statement and press conference will be key for Sterling going forward. If the BoE remains confident that inflation is going to fall sharply, then the central bank may hint that future rate hikes are not baked-in as yet and remain data-dependent.

How to Trade GBP/USD
How to Trade GBP/USD
Recommended by Nick Cawley
How to Trade GBP/USD
Get My Guide

GBP/USD is giving back a small part of its recent rally that saw the pair hit a fresh multi-month high of 1.2634 today. The pair may try and reclaim this mark early next week ahead of the BoE, with initial resistance seen at 1.2667 ahead of 1.2742.

GBP/USD Daily Price Chart – May 5, 2023

image2.png

Chart via TradingView

GBP/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -10% -4% -8%
Weekly -5% 8% 0%
What does it mean for price action?
Get My Guide

GBP/USD Retail Sentiment is Mixed

Retail trader data show 34.24% of traders are net-long with the ratio of traders short to long at 1.92 to 1.The number of traders net-long is 3.58% higher than yesterday and 12.29% lower from last week, while the number of traders net-short is 0.21% lower than yesterday and 18.32% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

EUR/GBP is sitting on a prior level of horizontal that has held firm this year. The pair are also testing the 200-day moving average for the first time since late August last year. Below here there is little in the way of recent technical support until another area of prior support around the 0.8570 comes into view.

EUR/GBP Daily Price Chart – May 5, 2023

image3.png

Chart via TradingView

Retail trader data show 63.17% of traders are net-long with the ratio of traders long to short at 1.71 to 1.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bearish contrarian trading bias.

What is your view on the GBP/USD and EUR/GBP – 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.

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

DISCLOSURES