Subscribe to RSS

GBP/USD Forecast: bullish view intact, Eyes trendline resistance

GBPUSD

The GBP/USD pair rose to a high of 1.5507 as the UK retail sales surpassed expectations by a big margin, before erasing gains and falling to 1.5369 amid sell-off in the EUR/USD pair and upbeat US weekly jobless claims data. The ECB President Draghi caught markets by surprise with his extremely dovish talk and led to a sell-off in the EUR and in the other European majors including Sterling. Still, the Cable managed to take back part of its losses and close above strong support at 1.5387, ensuring the bullish view remains intact.

keep an eye on 2-yr UK gilt yield

The UK economic calendar is empty today, so the focus is likely to be on the moves in the EUR/GBP cross. The slide in the EUR/USD could gain speed today in case the preliminary PMI reports disappoint, thereby leading toa further drop in the EUR/GBP and strength in the GBP/USD pair.

Traders should also keep an eye on the two-year UK gilt yield. After the Draghi’s dovish talk, the German 2-yr yield fell to record lows. US 2-yr yield also suffered losses, while UK 2-yr yield erased gains. Moreover, the ECB’s ultra dovish stance could force the BOE to play down rate hike bets and the hints of such a dovish turn by the BOE could be seen in the 2-yr UK yield. Losses in the 2-yr yield could cap gains in the GBP/USD pair.

GBP/JPY & GBP/CHF poised to rally?

At the moment, the GBP/JPY cross is increasingly looking positive. After ECB’s ultra dovish stance, the pressure on the BOJ to act would be on the rise. The pressure in more on the SNB, while the BOE is still relatively hawkish (more hawkish than the Fed). Hence, the probability of a rally in the GBP/JPY and GBP/CHF crosses is high.

GBP/CHF took out the falling trendline resistance on the daily chart on the closing basis yesterday and appears poised to break above 1.5118 (Sep 22 high). GBP/JPY also ran through offers around 185.50-185.60. The pair now appears poised to test 186.35 and 188.17 levels.

Technicals – Resistance at 1.5440

Sterling’s drop to 1.5369, followed by rise in Asia today above 1.5387 (Oct 13 high) indicates the currency is likely to extend gains to 1.5440 (falling trend line resistance on the daily). A break above the same would expose 1.55 handle. Moreover, a daily close above 1.5440 would add to bullish momentum. On the downside, failure to rise above 1.5440, followed by a drop below 1.5387 would be a sign that bears have regained control and the spot could travel lower to 1.5355 (38.2% of 1.5107-1.5509) and 1.5530 (200-DMA).

EUR/USD Analysis – 1.10 or sideways action?

EURUSD

EUR/USD suffered more than 2% drop on Thursday after the ECB President Draghi’s deposit rate cut talk and revision of the QE program in December caught markets by surprise. Jawboning of the EUR was widely expected and also priced-in since last Thursday to some extent. However, almost no one in the market, including me, was expecting Draghi to talk about the deposit rate cut. The pair fell to a low of 1.1071, before moving above 1.11 handle in Asia today.

Risk of further sell-off on weak PMIs

The preliminary PMI numbers for October are due for release today. As said earlier, a majority in the markets did not expect such a dovish talk. Many, including me in the ECB preview, also said more QE is not required, since PMIs are ticking higher while the confidence indicators are solid. However, if the PMIs drop today, the need to do more would be underscored further, leading to a drop in the EUR/USD Pair towards 1.10 levels. On the other hand, upbeat PMI figures could trigger a corrective rally (profit taking on shorts heading into the weekend).

The equity markets across the globe cheered Draghi’s dovish talk. So there is little probability of a risk aversion and the rise in the EUR today. However, commodity prices could play a spoil sport and keep cap gains in the equities. Overall a sideways action is likely today, so long as the equities don’t turn red and PMIs do not disappoint.

Technicals – Supported by the rising trend line

Euro found support of the rising trend line on the daily chart (represented by indigo line) located at 1.1070 and rose back above 1.10 levels. The recovery also kept 50% fib (of Mar to Aug rally) support at 1.1088 intact. However, the upside is being capped around the 200-DMA at 1.1122.

Despite the sharp sell-off, the daily chart says the rising trend since March low is still intact. Only a daily close below 1.1070 would mean a possibility of a move below 1.10 levels next week. On the other hand, the stage appears set for a corrective rally ahead of the weekend. The immediate upside appears capped around 100-DMA at 1.1174.

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$50 Forex No Deposit Bonus Exclusive Offer – FortFS

$50 Forex No Deposit Bonus Exclusive Offer – FortFS(0)

$50 Forex No Deposit Bonus Exclusive Offer to New and Existing Traders. The $50 Forex No Deposit Welcome Bonus can be received within the promotional time period, from 28.11.2016 to 07.12.2016 inclusive. Link:  $50 Forex No Deposit Welcome Bonus Link:  Up to 50% Bonus of Every Deposit Link:  15% Support Margin Bonus Available to: New

$25 Countdown Forex Bonus Promotion 2017 – ForexTime

$25 Countdown Forex Bonus Promotion 2017 – ForexTime(0)

$25 Countdown Forex Bonus Promotion 2017 new and existing will be eligible traders. ForexTime is offering by receive a $25 credit bonus when they make a deposit of $300 into their accounts*. Link:  $25 Countdown Credit Bonus 2017 Link:  Loyalty Cashback Promotions Link:  $4 Cashback back for every lot Ending Date: 31 December 2016 Available

100% US NFP Bonus Promotion December 2016 – Xtrade

100% US NFP Bonus Promotion December 2016 – Xtrade(0)

Up to 100% Deposit Bonus Promotion to All New and Existing Customers. December 2016 US NFP Announcement Deposit NOW $1000 to $5000 and receive 100% bonus! Link:  $50 No Deposit Bonus Promotion Link: 100% Deposit Bonus Promotion Link:  Free Flight Tickets to Madrid Available to: All New and Existing Customers Bonus Ending Date: Valid 01/12

100% Welcome Bonus Plus Risk Free Trade – Trade12

100% Welcome Bonus Plus Risk Free Trade – Trade12(0)

Get 100% Welcome Deposit Bonus and 7-day risk free trade, Boost your trading with a free 100% Welcome Deposit Bonus to your Live Trading Account. Link:  Get 100% Welcome Bonus Link: 50% Exclusive Deposit Bonus Available to: All new clients Ending Date: 31 December 2016 Bonus Offer: Get 100% Welcome Deposit Bonus Plus 7-day risk

Get 25% Credit Bonus on their first Deposit – HYCM

Get 25% Credit Bonus on their first Deposit – HYCM(0)

25% Credit Bonus available on your Deposits. Experience Some of HYCM New Features, Services and Offers Receive 25% Forex trading credit bonus Link:  25% Trading Bonus on your Deposits Ending Date:  31 December 2016 Available to:   New Clients only Bonus Offer: 25% Trading Bonus Available on your deposits to New Clients only. This promotion is

$300 Free win Forex Trading Credit Bonus – easyMarkets

$300 Free win Forex Trading Credit Bonus – easyMarkets(0)

$300 Free win Forex Trading Credit Bonus to all new and existing clients. Answer the weekend quiz and fill the form with your correct and accurate contact details. Link:  50% Deposit Bonus Up to $2000 Link:  $300 Free win Trading Credit Bonus Link:  $25 Forex No Deposit Bonus Available to: All new and existing clients.

$25 Free Bonus Forex & Binary Options – MarketsYes

$25 Free Bonus Forex & Binary Options – MarketsYes(0)

$25 No Deposit Bonus Forex / CFD & Binary Options. in order to get the No Deposit Bonus they must register and during the registration it will be a place to paste the coupon code: wl25cm . Link: $25 Free Bonus Forex / CFD & Binary Options Available to: All New Traders. Ending Date: 31

$50 No Deposit Forex Welcome Bonus – Fort Financial

$50 No Deposit Forex Welcome Bonus – Fort Financial(0)

$50 No Deposit Forex Welcome Bonus to New and Existing Traders. The $50 No Deposit Forex Welcome Bonus can be received within the promotional time period, from 28.11.2016 to 07.12.2016 inclusive. Link: $50 Forex No Deposit Welcome Bonus Link: Up to 50% Bonus of Every Deposit Link: 15% Support Margin Bonus Available to: New and

$50 Free Black Friday Cash Bonus Promotion – XTrade

$50 Free Black Friday Cash Bonus Promotion – XTrade(0)

$50 Black Friday Free Bonus Promotion to all new Customers. Open an Account Today Start Forex Trading with Xtrade Broker and Get a $50 Black Friday Free Bonus Link:  $50 Free Black Friday Cash Bonus Link:  $20 Forex No Deposit Bonus Promotion Link:  77% Forex Depoait Bonus Promotion Ending Date: 31 December 2016 Available to:

Free Forex and Binary Options Signals – Best Signals Fx

Free Forex and Binary Options Signals – Best Signals Fx(0)

Get Free Forex and Binary Options Best signals. Directly to YOUR mobile via WhatsApp!. The Free Best signals be sure to add the phone number +44 758 753 82 64 to your phone contacts and send word ‘signals’ via WhatsApp Link:  Free Forex and Binary Options Signals Available to: All existing and new customers. Ending

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories