Sergey Kamenshikov, Ph.D.
IFC Markets
Bank of England meeting on Thursday
The Britain’s pound sterling strengthened on Monday amid better manufacturing PMI in January by Markit. Will the upward movement continue?
The Britain’s PMI rose in January to 3-month high of 52.9 points from 52.1 points in December. This is its record growth since June 2014. In theory, this increases the probability of the rate hike by the Bank of England this year. The Bank’s next meeting is scheduled on Thursday 4. No change in interest rate is expected and it is likely to remain unchanged at the current 0.5%. The main reason for weak pound is still the risk of Britain exiting EU. The referendum on UK’s membership in EU is to take place by the end of 2017 but several market participants expect the event this year.
GBPUSD
On the daily chart GBPUSD: D1 has hit a fresh 7-year low late December and began correcting upwards. The Parabolic indicator and MACD give buy signals. RSI is advancing remaining below 50? No divergence. The Bollinger bands have widened a lot which means higher volatility. The bullish momentum may develop in case the pound surpasses the Friday’s high of 1,442. This level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal, 7-year low and the last fractal low at 1,407. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic signal. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1,407 without reaching the order at 1,442, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy
Buy stop above 1,442
Stop loss below 1,407
The Britain’s pound sterling strengthened on Monday amid better manufacturing PMI in January by Markit. Will the upward movement continue?
The Britain’s PMI rose in January to 3-month high of 52.9 points from 52.1 points in December. This is its record growth since June 2014. In theory, this increases the probability of the rate hike by the Bank of England this year. The Bank’s next meeting is scheduled on Thursday 4. No change in interest rate is expected and it is likely to remain unchanged at the current 0.5%. The main reason for weak pound is still the risk of Britain exiting EU. The referendum on UK’s membership in EU is to take place by the end of 2017 but several market participants expect the event this year.
GBPUSD
On the daily chart GBPUSD: D1 has hit a fresh 7-year low late December and began correcting upwards. The Parabolic indicator and MACD give buy signals. RSI is advancing remaining below 50? No divergence. The Bollinger bands have widened a lot which means higher volatility. The bullish momentum may develop in case the pound surpasses the Friday’s high of 1,442. This level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal, 7-year low and the last fractal low at 1,407. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic signal. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1,407 without reaching the order at 1,442, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy
Buy stop above 1,442
Stop loss below 1,407
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
EUR/USD hovers around 1.0700 ahead of German IFO survey
EUR/USD is consolidating recovery gains at around 1.0700 in the European morning on Wednesday. The pair stays afloat amid strong Eurozone business activity data against cooling US manufacturing and services sectors. Germany's IFO survey is next in focus.
GBP/USD steadies near 1.2450, awaits mid-tier US data
GBP/USD is keeping its range at around 1.2450 in European trading on Wednesday. A broadly muted US Dollar combined with a risk-on market mood lend support to the pair, as traders await the mid-tier US Durable Goods data for further trading directives.
Gold: Defending $2,318 support is critical for XAU/USD
Gold price is nursing losses while holding above $2,300 early Wednesday, stalling its two-day decline, as traders look forward to the mid-tier US economic data for fresh cues on the US Federal Reserve interest rates outlook.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.