GBP/USD: Sterling trades higher as US Dollar consolidates
Sterling is trading up 0.3% at around $1.3254 profiting from investors hesitation over the prospects of the US rate raises after Tax cuts.
The pound has been kicked higher after the UK retail sales rose 0.3% over the year in October, surpassing the expectations of annual fall.
The US House of Representatives easily passed the tax cutting legislation and moved it into Senate which is not expected to vote on the bill until next week's Thanksgiving weekend.
1. Technical Overview
From a technical point of view, the 4 hours chart shows that the pair is meeting short-term buying interest on approaches to its 200 EMA, flat around 1.3180 while the 20 SMA turned sharply higher below it, now nearing the mentioned level and reinforcing it. Indicators in the mentioned chart turned south within positive territory, but the downward momentum eased, as the RSI is now flat around 56. Advances are likely in the case of a dollar's sell-off, with short-term resistances from here at 1.3225 and 1.3260. Below the mentioned 1.3180 region, on the other hand, the pair could near 1.3100 before the week is over.
Support levels: 1.3180 1.3140 1.3100
Resistance levels: 1.3225 1.3260 1.3300
GBP/USD PRICE SENTIMENT
GBP/USD BULLISH PERCENTAGE INDEX
The market hasn't really budged at all and we need to see a break of this range that has defined trade over the past several days. At the same time, when you take a step back, the trend has actually been quite clear in 2017, which means the outlook going forward should point in this direction.
GBP/USD Pivot points
GBP/USD trading positions
2. Fundamental Overview
The GBP/USD pair run to 1.3259, its highest for this week, as the dollar resumed its decline, although the pair changed course and trimmed its daily gains to settle around 1.3200, with no particular catalyst behind this latest decline, but profit-taking. There were no macroeconomic releases coming from the UK today, with headlines around the Pound focused on Brexit woes. Negotiations remain in a stalemate, and UK David Davis, the Brexit secretary, suggested that Germany and France are to blame for the situation, as they are blocking trade-talks. On Thursday, rumors made the rounds of the EU not willing to give any special treatment to the UK post-Brexit, and while the Pound seems to be dealing quite well with this headlines, indeed they pose a risk towards the downside.
GBPUSD FUNDAMENTALS TODAY
3. Latest News & Analysis
Influential Institutions & People for the GBP/USD
The Pound VS Dollar can be seriously affected by news or the decisions taken by two main central banks:
The Bank of England is the central bank of the United Kingdom. Established in 1694 and privately owned in the beginning, the Bank was nationalised in 1946 so now is completely owned by the UK government. BOE's main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable. The bank is overseen by the Court, named used to reffer the board of directors, and is accountable to Parliament and the public.
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Mario Draghi, member of the Executive Board, is also the President of this organism.
Mark Carney is Governor of the Bank of England and Chairman of the Monetary Policy Committee, Financial Policy Committee and the Board of the Prudential Regulation Authority. He joined the Bank on 1 July 2013. Carney was born in Canada in 1965 and graduated from Harvard with a bachelor's degree in Economics in 1988. In Oxford University, he also received a master’s degree and a doctorate both in Ecobomics in 1993 and 1995 respectively. Before becoming the Governor of the BOE, he worked as a Governor of the Bank of Canada (BOC) from February 1st. 2008 until June 3rd. 2013.
Mario Draghi is member of ECB's Executive Board and also the President of this organism. His declarations are an important source of volatility, especially for the Euro and the currencies traded against it. Born in 1947 in Rome, Italy, he graduated of the Massachusetts Institute of Technology and became President of the European Central Bank in 2011. Draghi gives press conferences in the back of how the ECB observes the current European economy. His comments may determine positive or negative trends for the Euro in the short-term. Usually, a hawkish outlook is seen as positive/bullish for the EUR, while a dovish one is seen as negative/bearish.
BOE NEWS & ANALYSIS
ECB NEWS & ANALYSIS
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term originated in the mid-19th century, which makes it one of the oldest currency pairs.
Pound Dollar represents two economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, this pair has been suffering some turbulence due to risk related with the abandonment process from the European Union.
GBPUSD 2017 YEARLY FORECAST
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity of Euro Dollar is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.
The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when referred to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is due to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.