GBP/USD Weekly Price Forecast – British Pound Has Strong Week

The British pound has rallied significantly during the week, reaching towards the 1.2350 level. This is an area that shows up a lot on shorter-term charts, as both support and resistance. If we can continue to grind higher from here, and we very well could, then the 1.25 level becomes in focus. That area I think would continue to cause significant resistance, so pay attention to that level if we get there, as it will certainly be a major fight.

GBP/USD Video 01.06.20

If we were to break above the 50 week EMA, which is just above there, then the British pound could very well go to the 1.30 level. Ultimately, this is a market that I think has to deal with the Brexit headlines next week, as negotiations start back up. It already has been a lot of chirping between London and the continent, as the chief UK negotiator recently stated that the “European Union needs to come a long way to have an acceptable agreement.” If that is going to be the case, I cannot imagine that good comes out of this.

Were in a downtrend anyways, so that should only help the downward momentum. However, it looks to me like the market is likely to continue to see a lot of noise, so be cautious about your position size, and be patient. You need to see some type of exhaustive candle to start shorting. If we break above and close above the 50 week EMA on the daily chart, then it is time to start buying. I think it is that simple.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Tests 50 Day EMA

The British pound initially pulled back a bit during the trading session on Friday before turning around and smashing into the 50 day EMA. As we got there, the market did pull back a bit, and it should be noted that we continue to see a lot of noisy behavior overall. If that is going to continue to be the case, then I think it is only a matter of time before we see massive selling pressure. However, if we break above the 50 day EMA, then it is likely that we will then go looking towards the 1.25 level. At that point, I would anticipate seeing even more resistance.

GBP/USD Video 01.06.20

The market will continue to be very noisy, as we have a whole plethora of problems in the UK that will continue to weigh upon Sterling. The Brexit is still a major issue, and we have talks going on this coming week that will of course cause a bit of volatility as well. Ultimately, I do think that we pull back, and start going lower but it is probably going to take some type of headline to make that happen. The question is not so much in my mind whether or not we pullback, but if we do it here, or if we do it at the 1.25 level. With the leverage in Forex, timing is crucial, so if you do decide to short in this general vicinity I would do so with a small position. You can always add to a trade that is working out in your favor.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Remains Well-Supported on a Broadly Weaker Dollar

A strong appetite for risk has weighed on the dollar and all of the major currencies have gained against the greenback this week as a result. The British pound, however, has gained less than most of its counterparts as concerns over Brexit and further monetary policy easing in the UK has weighed.

The session ahead is expected to be a volatile one. Here are some of the scheduled risk events:

  • US President Trump will hold a press conference regarding China. The announcement was made late yesterday which has triggered some risk aversion
  • Fed Chair Powell will speak later today. It will be his last chance to speak before the mandatory blackout period ahead of the June 11 meeting.
  • The US will release its latest PCE index figures.

In addition to the scheduled risk events, trade adjustments are typically made at month-end which stands to further impact the markets today.

Technical Analysis

GBPUSD 4-Hour Chart

GBP/USD has been underpinned by a weaker dollar as the US dollar index (DXY) has fallen to lows not seen around the middle of March in early trading today.

While the pound to dollar exchange rate has benefited from this weakness, the pair is seen struggling to gain following a bullish break above a horizontal level at 1.2266.

This level is considered important as it acted as support in late April and early May and then proved to be a big hurdle last week.

So far, sellers have stepped in near 1.2350 with the 200 moving average on a 4-hour chart near there to create an obstacle for bulls.

A break above it shows further resistance at 1.2400 followed by 1.2476.

The pair was supported by a rising trend channel yesterday and once again shows upward momentum, but traders looking to take advantage of a weaker dollar may be better off looking at other currency pairs.

Key support for the session ahead remains at 1.2266 as the lower bound of the trend channel on a 4-hour chart is converging to the level. While above it, the next target for GBP/USD falls at 1.2398.

Bottom Line

  • GBP/USD has fallen into a range but holds above key support to maintain a bullish outlook.
  • The session ahead is expected to be volatile with several risk events and potential month-end trade adjustments that stand to move the markets.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Test Of Key Resistance At 1.2350

GBP/USD Video 29.05.20.

Increasing U.S. – China Tensions Do Not Help The U.S. Dollar

GBP/USD is testing the resistance level at 1.2350 as the U.S. dollar remains under pressure against a broad basket of currencies despite the increase in U.S. – China tensions.

U.S. President Donald Trump is set to hold a press conference on China on Friday. The key intrigue is whether U.S. will choose some mild sanctions like travel bans for certain Chinese officials or impose new tariffs on China.

Interestingly, the deterioration of U.S. – China relations and the prospect of a new phase of the trade war between the two biggest economies do not help the U.S. dollar which has served as a safe haven asset of last resort during the coronavirus crisis.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has broken out of the 99 – 101 range and is trending down, which is bullish for GBP/USD. Currently, the U.S. Dollar Index has settled closer to 98.

It’s too early to say whether the safe haven status is shifting from the U.S. dollar to gold, which is gaining ground today. If that’s the case, GBP/USD will get more support in the upcoming trading sessions.

Technical Analysis

gbp usd may 29 2020

The recent sell-off, caused by fears about upcoming Brexit problems, proved to be temporary, and GBP/USD quickly returned above 1.2250 and headed towards the test of the nearest resistance level at 1.2350.

This level has already been tested several times, and each time GBP/USD met significant resistance. The 50 EMA is located in the nearby and serves as an additional obstacle on the way up.

In case GBP/USD manages to settle above 1.2350, it will gain additional upside momentum and head towards the next resistance level at 1.2450.

On the support side, the nearest support for GBP/USD is located at the 20 EMA at 1.2280, followed by the major support level at 1.2250. Most likely, the whole area between 1.2250 and 1.2280 will serve as one significant support level for GPB/USD.

If GBP/USD settles below this level, it will gain downside momentum and head towards the test of the next support area between 1.2170 and 1.2200.

For a look at all of today’s economic events, check out our economic calendar.

 

Economic Data to Take a Back Seat with Trump’s News Conference the Main Event

Earlier in the Day:

It was a relatively busy day on the economic calendar this morning. The Japanese Yen and Aussie Dollar were in action early in the day.

Away from the economic calendar, the markets responded to Trump’s announcement on Thursday of plans to unveil measures against China at the news conference later today.

Fiscal stimulus from Brussels and the easing of lockdown measures across the EU and the U.S had provided support to riskier assets ahead of today’s open.

Looking at the latest coronavirus numbers,

On Thursday, the number of new coronavirus cases rose by 112,124 to 5,900,627. On Wednesday, the number of new cases had risen by 110,221. The daily increase was higher than both Wednesday’s rise and 106,139 new cases from the previous Thursday.

France, Germany, Italy, and Spain reported 5,612 new cases on Thursday, which was up from 1,892 new cases on Wednesday. On the previous Thursday, 1,976 new cases had been reported.

From the U.S, the total number of cases rose by 22,413 to 1,768,216 on Thursday. On Wednesday, the total number of cases had risen by 20,392. On Thursday 21st May, a total of 28,089 new cases had been reported.

The uptick on Thursday will need to be monitored in the coming days. With the easing of lockdown measures now in the 4th week, it would be in the coming days that a 2nd wave would become evident…

For the Japanese Yen

Inflation was in focus in the early part of the day, along with industrial production and retail sales figures.

In May, the Ku-area of Tokyo saw inflationary pressures return, with core consumer prices rising by 0.20% In April, consumer prices had fallen by 0.10%, year-on-year.

According to the Ministry of Internal Affairs and Communication.

  • Rising prices for clothes & footwear (+1.7%), furniture & household utensils (+1.7%), and culture & recreation (+1.2%) supported the rise.
  • There were also increases in prices for medical care (+0.8%) and housing (+0.7%).
  • Prices for Education (-8.9%) and fuel, light, & water charges (-1.9%) pinned back inflationary pressures, however.
  • There were also declines in prices for transport & communication (-0.1%) and miscellaneous (-0.8%).

In April, industrial production slumped by 9.1%, based on prelim numbers, following a 3.7% decline in March. Economists had forecast a 5.1% slide.

According to the Ministry of Economy, Trade, and Industry,

Industries that mainly contributed to the decrease were:

  • Motor vehicles, iron, steel & non-ferrous metals, and transport equipment (excl. motor vehicles).

Industries that mainly contributed to the increase were:

  • Production machinery.

Forecasts for May were not much better, with the forecast for industrial production revised from -1.4% to -4.1%. For June, however, forecasts are for production to rise by 3.9%.

Retail sales also disappointed in April, with lockdown and social distancing measures weighing.

According to the Ministry of Economy, Trade, and Industry, retail sales tumbled by 13.7% in April, year-on-year, following a 4.7% slide in March. Economists had forecasts an 11.50% decline.

The Japanese Yen moved from ¥107.701 to ¥107.608 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.22% to ¥107.41 against the U.S Dollar.

For the Aussie Dollar

Private sector credit stalled in April, following a 1.10% increase in March.

According to figures released by RBA,

  • Business credit rose by 0.1%, following a 3.1% rise in March.
  • Personal credit slid by 3.0%, following a 1.4% decline in March.
  • Housing credit rose by 0.2%, which was down from a 0.3% rise in March.

The Aussie Dollar moved from $0.66312 to $0.66315 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.08% at $0.6642.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.11% to $0.6203.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include French and German retail sales figures for April and the Eurozone prelim inflation numbers for May.

Prelim inflation figures for France and Italy and 2nd estimate GDP numbers for France are also due out.

We will expect the numbers to have a muted impact on the EUR, however. The EU’s recovery plan and the continued easing of lockdown measures remain positives.

While COVID-19 news and updates remain EUR positive, the markets will need to monitor the number of new cases. On Thursday, there was an uptick. If an upward trend begins, this could question member state plans to ease lockdown measures further.

From the early part of the day, it was risk aversion that pinned back the EUR as the markets await Trump’s news conference later today.

At the time of writing, the EUR was up by 0.07% to $1.1085.

For the Pound

It’s yet another quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

Through the day, expect market risk sentiment and any Brexit chatter to be key drivers.

At the time of writing, the Pound was up by 0.01% to $1.2322.

Across the Pond

It’s another busy day ahead on the U.S economic calendar. Economic data includes April inflation and personal spending figures and May consumer sentiment and Chicago PMI numbers.

Expect the May figures to have the greatest influence, with the markets likely to brush aside April numbers.

Outside of the numbers, FED Chair Powell is scheduled to speak. Any commentary on the U.S economy and monetary policy will garner plenty of attention.

The main event of the day, however, is Trump’s news conference. What does the U.S President have in store for China?

The Dollar Spot Index was up by 0.02% to 98.407 at the time of writing.

For the Loonie

It’s also a busy day on the economic calendar. Key stats include 1st quarter GDP numbers and April’s RMPI.

Expect the GDP figures to have some influence, though the markets are expecting some quite dire numbers. Anything better than forecast should be Loonie positive…

Crude oil prices and market risk sentiment will be the key driver on the day, however.

At the time of writing, the Loonie was down by 0.10% to C$1.3777 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Continues to Grind

The British pound has initially fallen during the trading session on Thursday but then rallied after the jobless numbers came out in the United States. Quite frankly, the US stock market seems to be rallying at any chance it can, and that tends to work in the favor of some of the riskier currencies such as the British pound. However, the UK has a whole slew of problems out there just waiting to happen so therefore we have to be overly cautious about how we play this market. That being said, I do believe that the 50 day EMA above will cause quite a bit of resistance, and the 1.2350 level is likely to be a difficult barrier to break above.

GBP/USD Video 29.05.20

To the downside, if we were to break down below the 1.21 handle, then this market could go down to the 1.20 level rather quickly. After that, then the British pound goes looking towards the 1.1750 level. There is a significant amount of volatility coming our way, so that being the case it is likely that we will see a lot of back and forth, and quite frankly an explosive move could be coming. In the meantime, I expect to see a lot of choppy behavior, so keep your position size reasonably small. Risk continues to be for sudden whipsaw trading due to the rush of headlines that can come at any moment. Quite frankly, you need to be cautious and protect your trading capital more than anything else at this juncture.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Recovery Rally Hindered By BoE Easing Expectations

Optimism is driving stocks higher and the dollar lower although Sterling is one of the few major currencies that has struggled to gain.

The pair is the weakest performer among the most popular major currencies in the month thus far, currently down 2% against the greenback.

Prospects of more monetary policy easing in the UK have weighed on the pair after several members of the Bank of England discussed the idea of unconventional easing measures last week.

Amidst the Coronavirus chaos, uncertainty over Brexit negotiations is also weighing on the pair.

GBP/USD briefly traded at a two-week high on Tuesday near 1.2360 but has declined nearly 1% since then. The pair is seen approaching notable support ahead of economic data that stands to move the markets.

The US is scheduled to release GDP figures from the first quarter later in the day which analysts expect will show a 4.8% contraction. Weekly unemployment figures will be released as well, the forecast is for another 2.1 million jobs lost.

Technical Analysis

GBPUSD 4-Hour Chart

The US dollar index (DXY) is sitting on major support and where the index goes from here stands to have a major impact on the pound to dollar exchange rate.

DXY is trading at support from the 99.00 level, a price point that held it higher in the middle of April and in early May.

GBP/USD rallied above 1.2266 earlier in the week which is considered to be a major level for the pair as it has acted as both resistance and support in the past few months. Buyers failed to protect the level on a pullback yesterday which signals weakness.

However, further support is seen from the lower bound of a rising trend channel. If buyers can defend it, GBP/USD may still make another run toward resistance at 1.2369.

Bottom Line

  • GBP/USD has come under pressure after trading at a two-week high earlier in the week.
  • The US dollar index is at a key inflection point, the reaction from here stands to set the tone for GBP/USD.
  • US GDP figures and weekly unemployment data will be released shortly after the North American open.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – Second Attempt To Settle Above 1.2250

GBP/USD Video 28.05.20.

U.S. Dollar Is Under Pressure As Demand For Safe Haven Assets Decreases

GBP/USD experienced wild action in the previous trading session as doubts about an orderly Brexit put significant pressure on the British pound. As a result, GBP/USD declined closer to 1.2200 after testing resistance at 1.2350.

Today, GBP/USD returns to the upside mode and is trying to settle above the key level at 1.2250.

The U.S. dollar is losing ground against a broad basket of currencies, and the U.S. Dollar Index is trying to settle below the important support at 99.

The U.S. Dollar Index spent the last two months between 99 and 101, and a move out of this range will lead to increased momentum. GBP/USD will likely have notable upside in case U.S. Dollar Index moves towards 98.

Currently, the optimism about the reopening of the world economy is somewhat offset by the worries about potential U.S. sanctions on China. At this point, the optimism prevails, and the demand for safe haven assets like the U.S. dollar decreases.

Today, this optimism will get tested by another portion of U.S. economic data. Traders will digest the second estimate of the first-quarter GDP Growth Rate, as well as the new data on Initial Jobless Claims and Continuing Jobless Claims.

Technical Analysis

gbp usd may 28 2020

GBP/USD met significant resistance at 1.2350 and fell back towards 1.2200 before rebounding above 1.2250. This significant volatility was caused by worries about Brexit.

Currently, GBP/USD is trying to settle above the support level at 1.2250. In case this attempt is successful, GBP/USD will have good chances to test the nearest major resistance near the 50 EMA at 1.2350.

If the test of the next resistance level is successful, GBP/USD will gain additional upside momentum and head towards the next resistance level at 1.2450. Such a move will signal that GBP/USD has firmly returned back into the previous trading range between 1.2250 and 1.2650.

On the support side, the main interest is still found at 1.2250. In case GBP/USD settles below this level, it will likely head towards the test of the next support area between 1.2170 and 1.2200.

While the recent move below 1.2250 did not encounter strong support at this level, it was a news-driven sell-off so there’s material chance that 1.2250 will continue to serve as an important support level for GBP/USD.

For a look at all of today’s economic events, check out our economic calendar.

U.S Weekly Jobless Claims to Put the Greenback in Focus as Geopolitical Risk Lingers

Earlier in the Day:

It was a relatively busy day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action once more.

Away from the economic calendar, the markets also responded to the moves across the EU and the U.S from Wednesday.

Fiscal stimulus from Brussels and the U.S government’s moves to further reopen the economy provided both support for riskier assets early on. Market sentiment overshadowed economic data that remained weak while improving …

For the commodity currencies, however, concerns over rising tensions between the U.S and China did pin back any breakouts.

Looking at the latest coronavirus numbers,

On Wednesday, the number of new coronavirus cases rose by 110,221 to 5,788,503. On Tuesday, the number of new cases had risen by 95,878. The daily increase was higher than both Tuesday’s rise and 89,941 new cases from the previous Wednesday.

France, Germany, Italy, and Spain reported 1,892 new cases on Wednesday, which was up from 1,535 new cases on Tuesday. On the previous Wednesday, 3,225 new cases had been reported.

From the U.S, the total number of cases rose by 20,392 to 1,745,803 on Wednesday. On Tuesday, the total number of cases had risen by 19,185. On Wednesday 20th May, a total of 21,774 new cases had been reported.

For the Kiwi Dollar

Business Confidence improved in May, with the ANZ Business Confidence Index rising from an April -66 to a finalized -41.8. May’s prelim had come in at -46.

According to the latest ANZ Report,

  • A net 39% of firms expect weaker economic activity in their own business, with the retail sector the most pessimistic once more.
  • Employment intentions rose from a net 50.8% of firms intending to reduce employment to a net 42%.
  • Investment intentions improved marginally from a negative 45% to a negative 32%.
  • Profit expectations rose from a net 70.4% expecting lower profitability to a net 56%. The agricultural sector remained the weakest at -71%, with the construction sector the least negative at -42%.
  • Export intentions rose by just 6 points to -36.

The Kiwi Dollar moved from $0.61897 to $0.61840 upon release of the numbers. At the time of writing, the Kiwi Dollar was up by 0.05% to $0.6185.

For the Aussie Dollar

1st quarter private new capital expenditure fell by 1.6%, quarter-on-quarter, following a 2.8% fall in the 4th quarter. Economists had forecast a 2.6% decline.

According to the ABS,

  • While investments in building and structures fell by 1.1%, investments in equipment, plant, and machinery slid by 2.3%.
  • Year-on-year, total New CAPEX slid by 6.1%.
  • Investments in building and structures tumbled by 7.9%, with investments in equipment, plant, and machinery falling by 4.0%.

The Aussie Dollar moved from $0.66222 to $0.66282 upon release of the figures. At the time of writing, the Aussie Dollar flat at $0.6622.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.13% to ¥107.86 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another relatively quiet day ahead on the economic calendar. Key stats include prelim May inflation figures from Germany and Spain.

Business and Consumer confidence figures out of Italy and the Eurozone should have a muted impact, following the EU’s COVID-19 recovery plan announced on Wednesday.

We will expect EU’s recovery plan and the continued easing of lockdown measures to provide support.

The markets will need to track any chatter from Beijing and Washington, however. Any rise in tensions and action from either side will test risk appetite on the day.

At the time of writing, the EUR was up by 0.11% to $1.1018.

For the Pound

It’s yet another quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

On Wednesday, we saw the Pound take a hit in response to the threat of the BoE cutting interest rates into negative territory.

BoE Chief Economist Haldane had attempted to pour cold water on such a prospect but to no avail.

Through the day, expect market risk sentiment and any Brexit chatter to be key drivers.

At the time of writing, the Pound was up by 0.05% to $1.2267.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Economic data includes April durable goods, 2nd estimate GDP numbers, and pending home sales figures for April.

Barring any deviations from 1st estimates, expect April’s core durable goods orders to garner some attention.

Any moves in response to the durable goods orders are likely to be limited, however. The market focus will be on the weekly jobless claims figures.

There’s plenty of optimism as the U.S economy continues to reopen, but whether the markets can stomach another 2m jump remains to be seen.

The Dollar Spot Index was down by 0.17% to 98.893 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats due out of Canada to influence the Loonie.

A lack of stats will leave the Loonie in the hands of market risk sentiment and the weekly EIA crude oil inventory numbers…

At the time of writing, the Loonie was down by 0.02% to C$1.3755 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – In Position to Post Closing Price Reversal Bottom

The U.S. Dollar is trading higher against a basket of major currencies late Wednesday after reversing earlier weakness. After feeling some early session selling pressure, the greenback was able to stabilize and move higher against the Euro, British Pound, Canadian Dollar and Japanese Yen.

The move against the Euro came about even as the common currency remained supported by news of a proposal for an economic recovery package to help the Euro Zone region recover from the coronavirus pandemic.

Sterling retreated below $1.2300 as investor focus shifted back to the possibility of negative interest rates in Britain and comments from government officials that not much progress had been made in Brexit negotiations.

Worries about the U.S. response to China’s proposed security law for Hong Kong helped drive U.S equity indexes lower during the cash market session, which in turn increased the U.S. Dollar’s appeal as a safe-haven asset. This move led to lower demand for the Japanese Yen.

At 19:16 GMT, the June U.S. Dollar Index is trading 99.240, up 0.334 or +0.34%.

Daily June U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through the intraday low at 98.715 will signal a resumption of the downtrend, while a move through the 98.345 swing bottom will reaffirm the downtrend.

The minor trend is also down. A trade through 99.995 will change the minor trend to up. This will also shift momentum to the upside.

The main range is 94.530 to 103.960. Earlier today, the index attracted buyers when it tested its retracement zone at 99.245 to 98.130.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 99.240, the direction of the June U.S. Dollar Index into the close on Wednesday is likely to be determined by trader reaction to yesterday’s close at 98.906.

Bullish Scenario

A sustained move over 98.906 will indicate the presence of buyers. This will also put the index in a position to form a potentially bullish closing price reversal bottom. If confirmed, this could trigger a 2 to 3 day counter-trend rally.

Overcoming the 50% level at 99.245 will indicate the buying is getting stronger. This could trigger a rally into the next 50% level at 99.690.

Bearish Scenario

A sustained move under 98.906 will signal the presence of sellers. This could trigger a test of the main bottom at 98.345, followed by the major Fibonacci level at 98.130.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – Pound Rolls Over After Brexit Comments

Brexit negotiations seem to be going nowhere as per usual, and as a result people are beginning to worry about the British pound again. Ultimately, this is a market that I think has gotten a bit expensive anyway, so it is not a huge surprise to see that it might be ready to rollover. I think the words coming out of the British negotiator did not help the situation either, suggesting that the European Union needs to “evolve its position” to reach some type of an agreement. It has been a while since we had to worry about Brexit, but that clearly will come into focus again as people start to shift attention away from the coronavirus situation.

GBP/USD Video 28.05.20

To the downside, the market looks as if it could go towards the lows again, but it might take some time to get there. This choppiness will more than likely continue, but we are clearly in a downtrend overall. Because of this, it makes quite a bit of sense to start selling, at least on the first signs of exhaustion on a shorter-term chart. The US dollar will continue to be attractive due to the fact that it is not the British pound if nothing else. US Treasuries of course stay strong, so that of course drives up a bit of demand for the US dollar as well. With that in mind, I prefer shorting giving an opportunity.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Holds Near Two-Week Highs as the Dollar Continues to Weaken

The US dollar came under pressure as traders from the UK and US returned from their holiday on Tuesday, resulting in a sharp push higher in GBP/USD.

The currency pair made a decisive push above important resistance at 1.2266 to trade at highs not seen in nearly two weeks.

Investors have sold dollars in favor of more risky currencies like the Australian or New Zealand dollar as the markets continue to show an appetite for risk. This has lead to broad-based pressure on the dollar which has benefited all of the major currencies.

The S&P 500 pushed sharply higher yesterday with SPY rallying above an important resistance confluence stemming from the $300 level and the 200-day moving average. The US index closed the day just below $300 but an early day rally in European equity markets today suggests the markets remain in risk-on mode.

Economic data is light for the session ahead. On Thursday, the US will release GDP figures for the first quarter. Analysts are expecting the report to show a 4.8% decline in growth in the first three months of the year.

Technical Analysis

GBPUSD 4-Hour Chart

Yesterday’s upside break in GBP/USD has set a bullish tone and near-term dips are likely to be bought as the dollar continues to fall.

A horizontal level at 1.2266 was breached yesterday and the level is considered significant. It held the pair higher in late April and early May and then held it lower last week.

Buyers are likely to defend the level in the event the pair dips toward it.

To the upside, the next major area of resistance is seen at 1.2417 as the price point held the pair lower on a recovery earlier this month, on a daily close basis.

Beyond that, further resistance at 1.2486 is considered to be a major hurdle as the same level capped the recovery in late March.

Bottom Line

  • GBP/USD price action signals more upside potential with bullish targets at 1.2417 followed by 1.2486.
  • The dollar is weighed by strong risk appetite. The commodity currencies have gained the most among the major currencies in this leg of dollar weakness.
  • GDP figures for the first quarter will be released out of the US on Thursday.

For a look at all of today’s economic events, check out our economic calendar.

Gold Finds No Love as Sentiment Improves

The improving market mood is certainly supporting appetite for risk at the expense of safe-haven assets with Gold depreciating over 1.5% since the start of the week. Buying sentiment towards Gold is likely to deteriorate in the short term amid rising equity markets and economic optimism. However, the current risk-on sentiment is unlikely to last given how trade tensions and global growth concerns remain dominant market themes. As caution makes a return in the future, the precious metal is positioned to appreciate.

Other key factors influencing Gold’s valuation will revolve around the Dollar’s performance and interest rates across the globe. Given how the Dollar remains vulnerable to disappointing US economic data and central banks seen easing monetary policy to support their respective economies, the longer-term outlook for Gold is bright.

Looking at the technical picture, Gold may test $1700 in the short term. A breakdown below $1700 could crack open the doors towards $1680.

Alternatively, bulls need a solid close above $1735 to spark a move towards levels $1760. If risk aversion makes a rude return, Gold has scope to venture to levels not seen since 2011 around $1800.

Currency spotlight – GBPUSD

Fasten your seatbelts as the next few weeks may be explosively volatile for the British Pound.

Talks between the United Kingdom and Brussels are set to resume on the 1st of June with many questions still left unanswered. The coronavirus chaos has certainly rattled the dynamics of things and placed the UK economy in a vulnerable position like many other major economies.

If little or no progress is made during the negotiations, fears may intensify over the UK crashing out of the European Union with no post-Brexit deal at the end of 2020.
Looking at the technical picture, the GBPUSD may sink back towards 1.2200 if 1.2850 proves to unreliable support.

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GBP/USD Daily Forecast – A Pause After The Recent Rally

GBP/USD Video 27.05.20.

Increasing U.S. – China Tensions Provide Some Support To The U.S. Dollar

Yesterday, GBP/USD got material support from the global risk-on sentiment as optimism about recovery and hopes for a vaccine for COVID-19 pushed riskier assets higher.

As a result, GBP/USD was able to move above the key resistance level at 1.2250 and settle above the 20 EMA.

The U.S. dollar, which serves as a safe haven asset of last resort, was losing ground against a broad basket of currencies. However, the U.S. Dollar Index managed to stay within the range between 99 and 101.

Today, the U.S. dollar is trying to rebound as demand for safe haven assets increases due to Hong Kong tensions.

Hong Kong is set to pass a law which will criminalize disrespect for China’s national anthem. Critics say that this is another move to curb Hong Kong’s freedom which aims to destroy the current “one country, two systems” setup.

U.S. President Donald Trump has already stated that he will take action against China this week. While Trump did not provide details, analysts expect that the U.S. will impose sanctions on China.

It remains to be seen whether the increasing tensions between U.S. and China will provide enough support for the U.S. dollar. Relations between the two countries have materially worsened over the past month but this did not stop the rally in many markets.

Technical Analysis

gbp usd may 27 2020

GBP/USD has breached the key resistance at 1.2250 as well as the 20 EMA and is trying to settle back into the previous range between 1.2250 and 1.2650.

The 50 EMA at 1.2350 serves as the first material resistance level for GBP/USD. It has already been tested and proved its strength. In case GBP/USD manages to get above the 50 EMA, it will gain additional upside momentum and head towards the next resistance level at 1.2450.

On the support side, the previous resistance level at 1.2250 will become the new support for GBP/USD. In addition, the 20 EMA is located in the nearby, creating a support area above 1.2250.

In case GBP/USD settles below the support at 1.2250, it will gain downside momentum and head towards the next support level at 1.2170.

For a look at all of today’s economic events, check out our economic calendar.

 

The ECB and Brussels Put the EUR in Focus as Geopolitics Tests Risk Sentiment

Earlier in the Day:

It was a relatively busy day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action, with economic data out of China also in focus.

Away from the economic calendar, the market’s attention returned to U.S – China tensions and China’s security law for HK.

COVID-19 news and numbers did remain supportive, however, with positive vaccine news hitting the news wires in the 1st half of the week.

Looking at the latest coronavirus numbers,

On Tuesday, the number of new coronavirus cases rose by 95,878 to 5,678,282 On Monday, the number of new cases had risen by 83,824. The daily increase was higher than both Monday’s rise and 94,189 new cases from the previous Tuesday.

France, Germany, Italy, and Spain reported 1,535 new cases on Tuesday, which was up from 747 new cases on Monday. On the previous Tuesday, 2,848 new cases had been reported.

From the U.S, the total number of cases rose by 19,185 to 1,725,411 on Tuesday. On Monday, the total number of cases had risen by 19,790. On Tuesday 19th May, a total of 20,688 new cases had been reported.

For the Kiwi Dollar

The RBNZ’s Financial Stability Report was in focus in the early hours.

Salient points from the latest report included,

  • COVID-19 has led to unprecedented economic disruption, with small businesses under stress.
  • Fiscal and monetary policy has cushioned the near-term impact. These include wage subsidies, large scale asset purchases to reduce interest rates, and a record low OCR.
  • Banks are in a strong position to support the economic recovery. The Reserve Bank has adjusted policies to enable banks to keep lending.
  • Measures include:
    • Mortgage deferrals for households and small businesses.
    • Delayed implementation of planned increases to capital requirements by a minimum of 12-months.
    • Eased core funding ratio requirements.
    • Supported the Business Finance Guarantee Scheme by creating a Term Lending Facility.

The Kiwi Dollar moved from $0.61971 to $0.61984 upon release of the report. At the time of writing, the Kiwi Dollar was up by 0.11% to $0.6192.

For the Aussie Dollar

Construction Work Done fell by 1.0% in the 1st quarter, following on from a 3.0% slide in the 4th quarter. Economists had forecast a 1.5% decline.

According to the ABS,

  • Residential work done fell by 1.6%, quarter-on-quarter, and slid by 12.5% when compared with the 1st quarter of 2019.
  • Total construction work down fell by 6.5% in the 1st quarter, year-on-year.

The Aussie Dollar moved from $0.66512 to $0.66530 upon release of the figures. At the time of writing, the Aussie Dollar down by 0.11% to $0.6646.

Out of China

Industrial profit figures for April had little influence. Year-on-year, profits were down by 4.3%, following a 34.9% slump in March. Year-to-date, profits were down by 6.75%, following a 36.7% tumble in March.

The Aussie Dollar moved from $0.66512 to $0.66530 upon release of the figures.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.04% to ¥107.50 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. While there are no material stats due out of the Eurozone, the ECB and the EU Commission are in focus today.

In the early part of the European session, ECB President Lagarde is scheduled to speak. Expect any chatter on monetary policy or the economic outlook to influence. Lagarde’s speech precedes the release of the ECB’s Financial Stability Review. We will expect the review to be a key area of focus for the markets today.

With the ECB in focus early in the day, Brussels will also be in the spotlight. The European Commission is due to announce the COVID-19 Recovery Fund and EU Budget.

At the time of writing, the EUR was down by 0.10% to $1.0971.

For the Pound

It’s another quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

A lack of chatter on Brexit and the risk-on sentiment has provided the Pound with further support this week. Expect any updates on Brexit and COVID-19 to test this support, however.

At the time of writing, the Pound was down by 0.06% to $1.2327.

Across the Pond

It’s also a quiet day ahead on the U.S economic calendar. Following Tuesday’s consumer confidence figures, there are no material stats to influence later today.

A lack of stats leaves geopolitics center stage. On Tuesday, U.S President Trump stated that there would be a U.S response to China’s plans for HK by the end of the week… Measures could include sanctions on China…

The Dollar Spot Index was up by 0.14% to 99.042 at the time of writing, with the U.S – China jitters providing support.

For the Loonie

It’s a relatively quiet day on the economic calendar. Building permit figures are due out later today that will likely have a muted impact on the Loonie.

With concerns over the U.S – China relations and the prospects of sanctions on China resurfacing, we can expect the Loonie to be under pressure.

Much will depend on how Beijing will respond to any steps taken by the U.S government. The continued easing of lockdown measures across major economies, remains Loonie positive, however.

At the time of writing, the Loonie was down by 0.06% to C$1.3785 against the U.S Dollar.

GBP/USD Price Forecast – British Pound Breaks Resistance

GBP/USD Video 27.05.20

The British pound has rallied significantly against the US dollar during early trading on Tuesday, as traders embraced the bullish attitude of the potential that there could be plenty of possible vaccines out there, which of course is jumping the gun to say the least. We have broken above the micro double top and cleared the 1.23 level though, so that of course is a very bullish sign.

That being said, the 50 day EMA is sitting just above, so I do think that it is only a matter of time before the sellers get involved and start pushing this pair back down. After all, the market has no business continuing to the upside, with perhaps the lone exception being a reason is that the Federal Reserve is trying to kill the greenback. Nonetheless, there are a plethora of reasons to think that perhaps the British pound continues to drift lower of the longer term due to the problems when it comes to the UK economy.

Yes, the UK economy is trying to open up, and as a result that should help the British pound and the British economy. Having said that, the coronavirus numbers are still horrible and the United Kingdom and of course the Brexit is still something that needs to be negotiated, so therefore it seems as if there is only a matter of time before the sellers come back in. At this point, the market breaks back down below the 1.23 handle, then I may consider shorting again. As far as buying is concerned, if I do choose to go long of the British pound, I am not going to do it against the US dollar.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Extends Gains Following Break of Bullish Flag Pattern

GBP/USD broke higher in early trading on Tuesday and has taken out resistance at 1.2266 which was a hurdle last week.

A broadly weaker dollar has helped the pair advance as well as further progression in Brexit talks between the EU and the UK.

Reuters reported earlier today that the EU is willing to make a concession ahead of talks next week. The issue at hand is fisheries as the UK wants to regain control of its waters and fish which EU fishermen have otherwise enjoyed the benefits of.

Brexit negotiations have been overshadowed by Coronavirus developments as of late but UK PM Boris Johnson continues to see a deal being reached by the end of the year.

The PM has seen some backlash from the public over his handling of the Cummings matter this week. Cummings, a close adviser to Johnson broke lockdown restrictions by driving 250 miles to the north of England. Johnson’s defended Cummings which has angered citizens and some members of the Parliament.

Douglas Ross, a Scottish junior minister conflicted by the way Johnson handled the situation, has handed in his resignation today.

Technical Analysis

GBPUSD 4-Hour Chart

GBP/USD has broken higher from a bullish flag pattern and has rallied above a key resistance level at 1.2266. This level previously served to hold the pair lower in late April and early May.

Further, the 1.2266 level marked the lower bound of a range that had been playing out for more than a month, ahead of a breakdown about two weeks ago.

In this context, the upward move seen today is significant and stands to keep the pair well-bid on dips over the near-term.

For the session ahead, the 1.2266 level is now seen as strong support. Not only are buyers likely to step in at the level, but GBP/USD bears that are on the wrong side of the trade may also look to exit there.

To the upside, the next level of resistance is seen at 1.2373.

Bottom Line

  • GBP/USD shows renewed upward momentum as the dollar has weakened broadly and progress has been made in Brexit talks.
  • A major level was breached to the upside today which suggests dips in GBP/USD will be well-supported over the near-term.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Daily Forecast – British Pound Gets A Boost From Increased Risk Appetite

GBP/USD Video 26.05.20.

British Pound Gains Ground Amid Rising Demand For Riskier Currencies

GBP/USD is gaining ground as the continued reopening of the world economy boosts appetite for riskier assets.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has declined from the 100 level towards 99.5.

S&P 500 futures are up almost 2% in premarket trading and look set to test the 3000 level during the regular trading hours, highlighting the increasing risk appetite.

In addition to the general softness of the U.S. dollar, the British pound is supported by the gradulal reopening of the British economy.

On Monday, UK Prime Minister Boris Johnson stated that outdoor markets and car dealers will reopen from June 1 while other non-essential retail will be able to open its doors from June 15.

Today, the U.S. will release New Home Sales data for April. Analysts expect that New Home Sales declined by 21.9% on a month-over-month basis as they were hit by coronavirus-related measures that kept potential buyers at their homes.

Technical Analysis

gbp usd may 26 2020

Yesterday, GBP/USD tried to get below the nearest support level at 1.2170, but the increased appetite for riskier currencies provided material support for the British pound, and the pair is back above 1.2200.

On its way up, GBP/USD will have to deal with the key resistance level at 1.2250. Previously, the rebound from the recent lows at 1.2080 was stopped at 1.2250, and failure to settle above the key resistance level suggested that the downside trend in GBP/USD will continue.

This time, GBP/USD will have another chance to get above 1.2250, supported by global market optimism. If GBP/USD manages to settle above this level, it will likely gain material upside momentum and head towards the next resistance level at the 50 EMA at 1.2350.

On the support side, the nearest stupport is located at 1.2170. In case GBP/USD breaches this level, it will likely fall closer to recent lows at 1.2080.

In case GBP/USD fails to settle above 1.2250 for the second time, sellers will likely increase their activity, and GBP/USD will find itself in a new trading range between the support at 1.2080 and the key resistance at 1.2250.

For a look at all of today’s economic events, check out our economic calendar.

 

Economic Data Puts the EUR and the Greenback in Focus as Risk Appetite Builds

Earlier in the Day:

It was a relatively quiet day on the economic calendar this morning. The Kiwi Dollar was in action, with April trade figures in focus.

Away from the economic calendar, the markets continued to monitor HK and the U.S reaction to China’s security law. Progress of the bill to make it more difficult for Chinese companies to list on U.S exchanges and China’s response also remains a factor.

COVID-19 news and numbers, however, remained supportive, driving market optimism and demand for riskier assets.

Looking at the latest coronavirus numbers,

On Monday, the number of new coronavirus cases rose by 83,824 to 5,582,404. On Sunday, the number of new cases had risen by 101,608. The daily increase was lower than Sunday’s rise, while higher than 82,564 new cases from the previous Monday.

France, Germany, Italy, and Spain reported just 747 new cases on Monday, which was down from 1,470 new cases on Sunday. On the previous Monday, 1,916 new cases had been reported.

From the U.S, the total number of cases rose by 19,790 to 1,706,226 on Monday. On Sunday, the total number of cases had risen by 20,190. On Monday 18th May, a total of 22,231 new cases had been reported.

For the Kiwi Dollar

On the trade front, the trade deficit narrowed from a NZ$3,460m to NZ$2,500m in April. The monthly trade surplus jumped from NZ$722m to a record NZ$1,267m.

According to NZ Stats,

  • The total value of goods exports decreased by NZ$220m (4.0%) from April 2019 to hit NZ$5.3bn.
    • A fall of NZ$211m (-69%) in the export of logs pinned back exports in April.
    • The slide in log exports, however, was offset by a NZ$202m (29%) jump in milk powder exports.
    • Kiwi fruit exports also continued to support, with a NZ$116m (37%) rise compared with April 2019.
    • Compared with April 2019, exports to Japan and the U.S increased, while exports to China, the EU, and Australia slumped.
  • Goods imports in April 2020 slid by NZ$1.1bn (-22%) to NZ$4.0bn, marking the 2nd largest decline on record.
    • A sharp slide in petroleum and products of NZ$352m (-58%) contributed to the slump in imports.
    • The imports of crude oil fell by NZ255m (77%), with petrol and diesel imports falling by NZ$97m (35%).

The Kiwi Dollar moved from $0.61011 to $0.60992 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.29% to $0.6121.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.14% to ¥107.86 against the U.S Dollar, while the Aussie Dollar was up by 0.24% to $0.6561.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Germany remains in focus, with May’s GfK Consumer Climate figures due out later this morning.

Expect some influence from the numbers, which will give some indication of whether a service sector-driven economic recovery is feasible near-term.

Global trade terms remain weak, which will likely shift focus to service sector activity near-term. Consumer confidence and consumption will be pivotal in any economic recovery.

At the time of writing, the EUR was up by 0.11% to $1.0910.

For the Pound

It’s another quiet day ahead on the economic calendar. Following Monday’s holiday, expect Brexit and COVID-19 news updates to be the key drivers on the day.

Will there be a surprise decision to agree to a Transition period extension? The current economic environment would support such a move. It would be hard to imagine voters complaining when considering the impact of the COVID-19 pandemic on the UK economy.

At the time of writing, the Pound was up by 0.14% to $1.2208, with risk sentiment providing support.

Across the Pond

It’s also a relatively busy day ahead on the U.S economic calendar. Following Monday’s public holiday, May’s consumer confidence figures are due out later today.

A marked pickup would be needed in confidence to support a more optimistic economic outlook. Weekly jobless claims figures suggest that, while an easing of lockdown measures is positive, labor market conditions will weigh.

April’s new home sales and March house prices figures also due out should have a muted impact later today.

Away from the calendar, chatter from the Oval Office and any progress with the bill to toughen rules on Chinese firms listing on U.S exchanges will also influence. There’s also any U.S response to China’s plans for the HK security law to also monitor.

The Dollar Spot Index was down by 0.18% to 99.687 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

Geopolitics and improved market sentiment towards the economic outlook will likely remain the key drivers.

Overnight BoC Governor Poloz spoke of inflation likely to take some time to return to target. Poloz added that the BoC has some flexibility in the time it takes to get inflation back to target. The comments suggested that there would be no monetary policy moves to fuel inflationary pressures.

At the time of writing, the Loonie was up by 0.17% to C$1.3961 against the U.S Dollar.

GBP/USD Price Forecast – British Pound Quiet During Holiday

The British pound has rallied slightly during the trading session on Monday, but I would not read too much into this considering that both the United States and the United Kingdom were away for various holidays. Furthermore, the Asian countries had various holidays going on as well, so I would not read too much into the candlestick other than it was a quiet day.

GBP/USD Video 26.05.20

Looking at the chart, it certainly looks as if the British pound is struggling a bit in general, so it makes sense to me that we do rollover given enough time. The 1.23 level above has been rather resistive, and I expect that to continue, as there are plenty of concerns out there to keep this market somewhat low. At this point, the United States dollar course will continue to be a bullish currency, due to the fact that the global economy is a bit of a mixed, and quite frankly unsettled economy at the moment.

At this point in time, I do believe that we are going to continue to see sellers, especially near the 1.23 level. The 50 day EMA is starting to race towards that area as well, so technical traders will be paid attention to it as well. To the downside, we could go looking towards 1.21 handle, and if we break down below there, I think 1.20 will be the next target, followed by 1.1750 level. At this point, I do not have a scenario in which I am looking to buy the British pound, because clearly it continues to fail every time it rallies.

For a look at all of today’s economic events, check out our economic calendar.