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

Free $100 Non-Deposit Bonus to Everyone – PrivateFX

Free $100 Non-Deposit Bonus to Everyone – PrivateFX(0)

Free $100 Non-Deposit Bonus to Everyone for PrivateFX New Customers. Each new customer who open account from May 16 will get into his/her account a Free bonus of 100 USD to invest in PrivateFX Company’s tools Link:  $100 Non-Deposit Bonus to Everyone Available to: All new trading account Bonus Offer: Free $100 Non-Deposit Bonus to

300% Tradable Bonus plus Risk Free Trade – MarketsYes

300% Tradable Bonus plus Risk Free Trade – MarketsYes(0)

300% Forex Tradable Bonus Promotion and Risk Free Trade plus Forex Free Signals all New and existing clients. MarketsYes is offering all prospective clients deposit for up to 3000 USD/EUR/GBP a 300% Tradable Deposit Bonus. Link:  300% Tradable Bonus Promotion Link:  Risk Free Trade plus Forex Free Signals Available to: All New and existing clients

25% Forex Credit Bonus on their First Deposit – HYCM

25% Forex Credit Bonus on their First Deposit – HYCM(0)

25% Credit Forex Bonus Promo 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 2017 Available to:   New Clients only Bonus Offer: 25% Forex Trading Bonus Promo Available on your deposits to New Clients only.

$25 Deposit and earn $5000 Cashback Bonus – UFX

$25 Deposit and earn $5000 Cashback Bonus – UFX(0)

100% Forex Real Money Cash-back Bonus Promotion to all new and existing clients. Join and gain exclusive access to the ONLY online trading 100% Forex Cashback rewards bonus program Link:  100% Real Money Cash-back Promotion Link:  $50 Forex No Deposit Bonus Promotion Available to: All new trading account Ending Date: 31 December 2018 Bonus offer:

Weekly Demo Trading Contest – Adamant Finance

Weekly Demo Trading Contest – Adamant Finance(0)

Weekly Forex Demo Trading Contest 2017 total amount of the prize fund is 1300USD. We announce traders’ contest for all who want to take part and to gain prizes. Link:  $50 No Deposit Welcome Bonus Link:  Weekly Forex Trading Contest Available to: All new and existing clients. Ending Date: 31 December 2017 Contest offer: Forex

$30 Fx Bonus to Your Account Completely Free – Fidelis

$30 Fx Bonus to Your Account Completely Free – Fidelis(0)

Get $30 No Deposit Fx Bonus Promotion in your Fidelis CM account and start your forex trading career. Open your new trading account with Fidelis CM in a few simple steps and get your $30 Fx Free No Deposit Bonus credited in your account. Link:  $30 Forex No Deposit Bonus Completely Free Available to: All

Free Forex Trading Signals Promotion – Forex Time

Free Forex Trading Signals Promotion – Forex Time(0)

FXTM Free Forex Trading Signals Spotting Trading Opportunities Just Got Easier and Up to 200% Withdrawable Cashback Rebates and get $4 Cashback back for every lot you trade. Link:  Free Forex Trading Signals Link:  Loyalty Cashback Promotions Link:  200% Withdraw able Cashback Rebates Ending Date: 31 December 2018 Available to: All Customers Bonus Offer: ForexTime

Free MT4 VPS plus 100% Welcome Bonus – FXGiants

Free MT4 VPS plus 100% Welcome Bonus – FXGiants(0)

FXGiants is offering its valued Trader  the exclusive 100% Maximiser Forex Welcome Bonus. Be rewarded with this unique offer and maximise your trading potential with NO limits. Link:  $35 No Deposit Bonus Promotion Link:  100% Maximiser Deposit Bonus. Link:  20% Bonus Advantage up to $2000 Available to: All new trading account Bonus offer: $35 No

$1000 Welcome Deposit Bonus Promotions – eToro

$1000 Welcome Deposit Bonus Promotions – eToro(0)

Get Forex Welcome Deposit Bonus Promotions code by eToro Forex Broker. Trade over 900 global instruments with most advance and friendly trading platform. Link:  Top Copy Trading Social Platforms Link: Up to $1000 Welcome Deposit Bonus Available to: All new account Ending Date: 31 December 2018 Bonus Offer: Get Forex Welcome Deposit Bonus Promotions code

$50 Forex No Deposit Welcome Free Bonus – ForexBull

$50 Forex No Deposit Welcome Free Bonus – ForexBull(0)

$50 Forex No Deposit Welcome Free Bonus is available to all new clients of ForexBull as well as for those who still haven’t got any previous No Deposit Welcome Free Bonuses from the company. Link:  $50 Forex No Deposit Welcome Bonus Available to: All new trading account Ending Date: 31 December 2017 Bonus offer: $50

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