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GBPUSD

The when, why, and how sterling reaches parityIn just two trading days, the probability that the sterling will fall to parity against the US dollar increased to 60% on Sept. 26 from 32% on Sept. 23 after the UK government's announcement of new tax cuts elevated concerns for the country's economy. Bloomberg estimates that the GBP/USD will have equal value before the end of 2022, based on sterling-dollar implied volatility . The value of the sterling was $1.0350 as of Sept. 26, marking a record low for the currency. Economists believe that the slump in the pound could force UK's central bank to enact another interest rate increase in order to support the currency, The Guardian reported. Capital Economics UK Economist Paul Dales told the paper that the Bank of England could raise interest by 100 basis points or 150 basis points. The weakness in the pound is being exacerbated by fears the UK economy is entering a recession after inflation breached the 10% mark in July, marking a record-high for the country. It elicited a promise from the Bank of England that it will "respond forcefully, as necessary" to curb the growth in the prices of goods and services. The path to parity The downward movement of the sterling follows the UK government's announcement of new tax cuts, fueling the concerns of investors and economists that the four-nation country's debt will reach unaffordable levels and further fuel inflation . It also comes after the Bank of England increased rates by 50 basis points, lower compared with the 75 basis-point hike of the US Federal Reserve . The government intends to finance its tax cuts with debt worth tens of billions in sterling. The UK Debt Management Office is planning to raise an additional 72 billion pounds before next April, raising the financing remit in 2022-2023 to 234 billion pounds. Deutsche Bank UK Economist Sanjay Raja said the tax cuts were adding to medium-term inflationary pressures and were "raising the risk of a near-term balance of payment crisis." Vasileios Gkionakis, a Citi analyst, echoed sentiments that the move will bring the sterling to parity with the US dollar , noting that "the UK will find it increasingly difficult to finance this deficit amidst such a deteriorating economic backdrop; something has to give, and that something will eventually be a much lower exchange rate." "Sterling is in the firing line as traders are turning their backs on all things British," said David Madden, a market analyst at Equiti Capital. "There is a creeping feeling the extra government borrowing that is in the pipeline will severely weigh on the UK economy." If it comes to pass, what then? The implications of the sterling being at parity with the US dollar boil down to how and where the money is being spent. When the euro was at parity with the dollar, there were winners and losers and the same could be expected if ever the sterling is at the same value as the dollar. For trading and exporters, the change in the exchange rate will surely be noticeable. In the US, a stronger dollar would mean lower prices on imported goods, which could help cool down inflation . The opposite could be anticipated for the UK as previous payments would afford lesser products if the two currencies are at parity. Accordingly, US companies doing business in the UK will see revenue from those businesses shrink if they bring back earnings in pounds to the US. However, if pound earnings are used in the UK, the exchange rate becomes less of an issue.
by BlackBull_Markets
#GBPUSD it's possible to buy#GBPUSD waiting for retracement and Price trading in nearby 4hr support area and waiting for bullish candlesticks formed it will take entry for above the bullish candlestick and it will go for the next level of resistance Why we like it: Price is trading in nearby 4hr support area Waiting for bullish candlesticks formed possible to move the next resistance area waiting for retracement 1st support: 1.100235 Next Zone area & horizontal swing Low support 1st Resistance 1.13946 Zone area & horizontal swing high resistance
Long
by Skandhatrade
GBPUSD stays on bear’s radar unless crossing 1.1280GBPUSD holds onto the rebound from an all-time low, marked the previous day, amid oversold RSI conditions. The recovery also crossed the previous record bottom printed in 1985. However, the 1.1000 round figure and a downside sloping support-turned-resistance line from May, around 1.1280 by the press time, restricts the Cable pair’s immediate rebound. Also acting as an upside filter is the year 2020 bottom surrounding 1.1420. Alternatively, the GBPUSD pair’s fresh weakness needs acceptance from Monday’s opening levels of around 1.0800, as well as the year 1985 bottom close to 1.0520. In a case where the quote remains bearish past 1.0520, the 1.0500 threshold and the latest trough surrounding 1.0340 could lure the sellers. It’s worth noting, however, that the pair’s weakness past 1.0340 could make it vulnerable to testing the 1.0000 psychological magnet. Overall, GBPUSD is likely to witness a corrective bounce but the buyers are far from retaking control.
by MTradingGlobal
#GBPUSD it's possible to buy#GBPUSD waiting for retracement and Price trading in nearby 4hr support area and waiting for bullish candlesticks formed it will take entry for above the bullish candlestick and it will go for the next level of resistance Why we like it: Price is trading in nearby 4hr support area Waiting for bullish candlesticks formed possible to move the next resistance area waiting for retracement 1st support: 1.100235 Next Zone area & horizontal swing Low support 1st Resistance 1.13946 Zone area & horizontal swing high resistance
Long
by Skandhatrade
#GBPUSD it's possible to buy#GBPUSD waiting for retracement and Price trading in nearby 4hr support area and waiting for bullish candlesticks formed it will take entry for above the bullish candlestick and it will go for the next level of resistance Why we like it: Price is trading in nearby 4hr support area Waiting for bullish candlesticks formed possible to move the next resistance area waiting for retracement 1st support: 1.10960 Next Zone area & horizontal swing Low support 1st Resistance 1.16261 Zone area & horizontal swing high resistance
Long
by Skandhatrade
1
GBPUSD breaks 1.1290 support ahead of BOE announcementsGBPUSD renews 37-year low, breaking four-month-old support line and 61.8% Fibonacci Expansion (FE) of the GBPUSD pair’s moves between August 17 and September 13, close to 1.1290, as traders await the Bank of England’s (BOE) monetary policy updates. Though the cable pair broke the nearby key support, now resistance around 1.1290, oversold RSI conditions and a likely positive surprise from the “Old Lady”, as the BOE is popularly known, tease the Cable pair buyers. In that case, the 5-DMA and a six-week-old resistance line, respectively around 1.1410 and 1.1560, could challenge the bulls. Following that, a one-month-long horizontal resistance area will precede the 50-DMA to restrict the quote’s further upside around 1.1740 and 1.1845 in that order. Alternatively, the 78.6% Fibonacci Expansion (FE) level near 1.1160 lures the GBPUSD bears unless it stays below 1.1290. In a case where the Cable pair drops below 1.1160, the odds of witnessing a slump towards the 1.1000 psychological magnet can’t be ruled out. Overall, GBPUSD seemed to have a little downside room ahead of the anticipated hawkish BOE.
by MTradingGlobal
#GBPUSD it's possible to buy#GBPUSD waiting for retracement and Price trading in nearby 4hr support area and waiting for bullish candlesticks formed it will take entry for above the bullish candlestick and it will go for the next level of resistance Why we like it: Price is trading in nearby 4hr support area Waiting for bullish candlesticks formed possible to move the next resistance area waiting for retracement 1st support: 1.13724 Next Zone area & horizontal swing Low support 1st Resistance 1.24353. Zone area & horizontal swing high resistance
Long
by Skandhatrade
GBPUSD recalls bears targeting 1.1400, UK CPI in the spotlightGBPUSD seesaws below 50-SMA after breaking the weekly support line, not to forget to mention the reversal from a three-week-old horizontal hurdle. The pullback also takes clues from the downside RSI and MACD to suggest further downside towards the yearly low marked the last week around 1.1400. It should, however, be noted that a 61.8% Fibonacci Expansion (FE) of August 17 to September 13 moves, near 1.1280, could challenge the pair sellers afterward. If not then, the downward sloping support line from August 22, close to 1.1230 by the press time, will gain the market’s attention. Meanwhile, the GBPUSD rebound remains elusive unless crossing the one-month-old horizontal resistance area near 1.1745-50. That said, the one-week-long support-turned-resistance around 1.1630 guards the immediate recovery. If at all the cable pair rises past 1.1750, the 200-SMA level surrounding 1.1890 could act as the last defense for bears, a break of which could give control to the buyers. Overall, GBPUSD is back into the bear’s court and is likely to renew the yearly low ahead of the key UK inflation numbers.
by MTradingGlobal
The GBP in the reign of King CharlesThe death of Queen Elizabeth II on Sept. 8 beaconed a new era for the UK, coming on the heels of Elizabeth Truss taking office as prime minister and heralding the proclamation of King Charles as the new monarch . These changes could be overwhelming for a country that has known only one monarch for 70 years. Even more daunting is that these changes happened amid economic uncertainties, the energy problems affecting Europe and before full recovery from the COVID-19 pandemic has been truly achieved. The British pound was modestly lower compared with other major currencies a day after the Queen's passing. However, the sterling had been relatively week even after the Truss was named prime minister. On Sept. 7, it dropped to a 37-year low of $1.1469. However, the pound has found some buyers since the seventh, bouncing from this low and climbing back to its last consolidation zone just above 1.7000. This is perhaps an odd bout of bullishness in the lead up to the release of the UK’s August inflation data due on Wednesday. Days before the Queen's death, Goldman Sachs warned that the UK could fall into recession in the fourth quarter of 2022, echoing earlier forecasts from Bank of England. Considering these bearish sentiments, all eyes are on how Truss and the new King will navigate the country of four nations through these murky economic waters . Long lived the queen Queen Elizabeth was 96 years old when she died. She was the UK's longest-reigning monarch and lived through the aftermath of WWII, the winding down of Britain’s vast empire, the 2016 Brexit vote and a global pandemic, among other major events. Following her death, her eldest son Charles takes the throne and the crown amid ongoing criticisms that the monarchy is outdated and absorbing public finances, CNBC reported. Considering the country's current financial situation, it is not too far off to assume that these disapprovals will only intensify. King Charles is already one of the richest people in the world. Being the monarch , he will also be responsible to the Crown Estate, which comprises 15.6 billion pounds ($18.25 billion) of property, according to Financial Times senior business writer, Andrew Hill . While the Royal Family may not have a direct hand at UK's financial policies, it falls on the new King the responsibility to rally public sentiment, especially during a period of crisis. Andrew Roberts, a historian and professor at King's College London, was cited by CNBC as saying that the new monarch intends to "slim down the Royal Family" to show solidarity with the rest of the country during a "massive cost-of-living crisis." Trusting Liz Truss Amid the troubling times in the UK, perhaps harder work is demanded more from new Prime Minister Truss than any other person in the country. In her last public engagement, the Queen met with Truss two days before her death to ask the latter to form a new government. Truss immediately jumped into action, unveiling a 40 billion-pound energy support package for homes and businesses in the UK amid soaring electricity and gas prices, exacerbated by the reduction of supply from Russia after it faced sanctions over its military action against Ukraine. The plan includes a 2,500 pound cap on household energy bills for 2023. Truss took office also after the annual inflation rate in the UK reached 10.1% in July, marking a record high since February 1982 and a peak among G-7 nations. Her election victory also comes on the back on the biggest rate hike in the country in 27 years, which is also expected to further grow once the Bank of England resumes its monetary meeting following a period of mourning for the Queen. Earlier unveiled economic plans for the Truss government also includes an emergency budget targeted at reversing the recent increase in national insurance contributions, as well as the removal of the corporation tax hike scheduled for April 2023.
by BlackBull_Markets
#GBPUSD it's possible to buy#GBPUSD waiting for retracement and Price trading in nearby 4hr support area and waiting for bullish candlesticks formed it will take entry for above the bullish candlestick and it will go for the next level of resistance Why we like it: Price is trading in nearby 4hr support area Waiting for bullish candlesticks formed possible to move the next resistance area waiting for retracement 1st support: 1.13724 Next Zone area & horizontal swing Low support 1st Resistance 1.24353. Zone area & horizontal swing high resistance
Long
by Skandhatrade
GBPUSD eyes 1.1730 on bullish RSI divergence, channel breakoutGBPUSD crosses the monthly bearish channel, also the 50-SMA hurdle, after briefly declining to the lowest levels since 1985. The corrective bounce takes support from the bullish RSI divergence where the lower low on the prices contrasts with the higher low of the RSI (14), which in turn suggests brighter chances of the pair’s recovery. As a result, the buyers are on the way to the three-week-old horizontal resistance area near 1.1730-40. Should the quote manage to remain firmer past 1.1740, the 1.1900 and the 1.2000 thresholds could please the bulls afterward. Meanwhile, the stated channel’s upper line acts as the immediate support for the pair, around 1.1500. Following that, the weekly descending trend line surrounding 1.1400 seems to restrict short-term GBPUSD downside ahead of the lower line of the aforementioned bearish channel, close to 1.1340 at the latest. It’s worth noting, that the pair’s south-run past 1.1340 could keep grinding the quote slowly towards the 1.1000 psychological magnet. In a case where the pair remains bearish past 1.1000, the low marked in the year 1985 near 1.0520 will regain the market’s attention. To sum up, GBPUSD seems to have seen enough of the downside and the bull’s turn is just around the corner. However, the fundamentals are the key and should be read carefully for clear directions.
by MTradingGlobal