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

Get 100% Bonus Promo Doubles your Deposit – FBS

Get 100% Bonus Promo Doubles your Deposit – FBS(0)

Get 100% Forex Bonus Doubles your Deposit FBS Broker has prepared something really special for you. Activate 100% Forex Deposit Bonus and make your trading x2 more efficient Link:  $50 Free Will be credited to Your Account Link:  $88.8 Forex No Deposit Bonus Link:  $123 Forex No Deposit Bonus Link:  100% Forex Deposit Bonus Promotion

Free SERENITY Tokens for Forex Trading – Grand Capital

Free SERENITY Tokens for Forex Trading – Grand Capital(0)

Get free SERENITY tokens for forex trading on ECN Prime and/or Standard account. SERENITY Free tokens can be used to pay for Serenity Financial platform services or sold on an exchange after the ICO ends. The nominal price of 1 token is 0.1 ETH. Link:  Free SERENITY Tokens for Trading Link:  444% Profit Receive for

Trading Signals and get your opportunity to succeed – FXTM

Trading Signals and get your opportunity to succeed – FXTM(0)

Take advantage of ForexTime Free Forex Trading Signals and get your opportunity to succeed. Get Free Forex Trading Signals prepared by ForexTime professional analysts Link:  FREE trading signals Special Promo Link:  Start Copy Trading your Perfect Partner Link:  $25 Per Referral Earn up to $10000 Link:  Receive $30 Tradeable Credit Free Bonus Link:  Demo Forex

Get 100% Bonus Trusted and Regulated Broker – AvaTrade

Get 100% Bonus Trusted and Regulated Broker – AvaTrade(0)

Register and forex start trading now and claim your 100% Deposit Bonus minimum fund of $100 for first deposit. Just for new customer we welcome you with some fantastic 100% Bonus Offers Link:  100% Bonus to Your First Deposit Link:  35% New Accounts Bonus Promotion Link:  Advantages of Trading Bitcoin Cash Available to: All new

Win-Win Live Trading Forex Contest – Tickmill Ltd.

Win-Win Live Trading Forex Contest – Tickmill Ltd.(0)

Holiday 2017 season is just around the corner and Tickmill is rewarding you with real Bitcoin prizes and rebates. Win-Win Live Trading Forex Contest ensures there is a prize for everyone! Link:  Win-Win Forex Live Trading Contest Link:  Weekly Demo Race Trading Contest Link:  $30 Free Welcome Bonus Offer Link:  Forex Monthly Live Trading Contest

$3500 Forex No Deposit Bonus, Risk Free Trading‎ – InstaForex

$3500 Forex No Deposit Bonus, Risk Free Trading‎ – InstaForex(0)

Get $3500 No Deposit Free Bonus from InstaForex no need to risk your own money if you have already got funds to earn more money. The $3500 No Deposit Bonus from InstaForex is an exciting opportunity to start live trading. Link:  Up to $5000 No Deposit Free Bonus Link:  $500 Forex No Deposit Free Bonus

444% Profit Receive for a Single Trade – Grand Capital

444% Profit Receive for a Single Trade – Grand Capital(0)

Up to 444% Profit receive with our new Express Options for Grand Capital Binary Option Broker Ltd. Make a correct prediction for 3 assets at the same time Link: Up to 444% Profit Receive for a single trade Link:  $500 Forex No Deposit Welcome Bonus Link:  40% Forex Welcome Deposit Bonus Available to: All new

Receive $30 Credit Bonus for Trusted  Broker- FXTM

Receive $30 Credit Bonus for Trusted Broker- FXTM(0)

Switch to ForexTime and receive $30 Trading Credit Bonus. Join the hundreds of thousands of traders around the world who have already chosen ForexTime as a broker and receive $30 Trading Credit Bonus as a thank you for switching. Link:  Up to $200 Cash Bonus this December Link:  Receive $30 Tradeable Credit Bonus Link:  FX

15% Support Margin Bonus and $50 Free Bonus – FortFS

15% Support Margin Bonus and $50 Free Bonus – FortFS(0)

15% Support Margin Bonus Plus $50 No Deposit Bonus to all New and Existing Traders. For Every Traders who passed the verification process in their traders room can get the $50 Free Bonus Link:  $50 Forex No Deposit Welcome Bonus Link: Up to 50% Bonus of Every Deposit Link: 15% Support Margin Bonus As from

Get $34 Forex No Deposit Bonus Contest – Xtream Forex

Get $34 Forex No Deposit Bonus Contest – Xtream Forex(0)

Sign-Up and Get $34 Forex No Deposit Bonus Contest Enjoy Forex Trading Without Deposit. Grab your $34 Forex No Deposit Bonus and start your live Forex trading to win big cash prize. Link: $34 Forex No Deposit Bonus Contest Available to: All new clients Forex $50 No Deposit Bonus Contest Duration? Registration is open till

read more

Forex Featured BrokerSocial Trading

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