GBP/USD: 200-day SMA is the level to beat for bears, 1.3000 lures bulls
With the prices successfully trading beyond 200-day SMA and 61.8% Fibonacci retracement of March-September declines, GBP/USD traders are less worried about the latest pullback to 1.2870 by the press time of Friday’s Asian session.
1. Technical Overview
The GBP/USD pair maintains the bullish bias, both short and longer term, as it’s trading at levels last seen mid-May. The positive momentum is exclusively based on Brexit hopes, and technical readings support it, although macro headlines could easily trigger a U-turn. At the time being, however, the risk is skewed to the upside, according to the 4 hours chart, as the pair continues finding support in a bullish 20 SMA, currently at 1.2750. Technical indicators have resumed their advances, the Momentum within positive levels, and the RSI currently at 75. It seems unlikely the pair could trigger a relevant breakout during the upcoming session, as the market will likely wait for Parliament’s decision before deciding the next directional move.
Support levels: 1.2830 1.2790 1.2755
Resistance levels: 1.2910 1.2950 1.2990
GBP/USD PRICE SENTIMENT
GBP/USD BULLISH PERCENTAGE INDEX
GBP/USD Pivot points
GBP/USD trading positions
2. Fundamental Overview
The GBP/USD pair soared to 1.2989, adding roughly 200 pips on news indicating that an agreement was reached between EU´s and UK’s representatives, that would be discussed within the EU Summit. The initial headlines suggested that the Northern Irish Democratic Unionist Party (DUP) supported the deal, but the party later formally stated that it would vote against this Brexit deal. Furthermore, opposition Labour leader, Jeremy Corbyn, said that this accord is worse than the previous one. Chances that the document will pass the Parliament decreased sharply, resulting in the GBP/USD pair plummeting to daily lows in the 1.2770 region. The UK Parliament is set to convene for an extraordinary session on Saturday, and discuss the newly withdrawal agreement and the political declaration approved by the EU27. Chances of a general election began sounding back loud. The pair recovered on broad dollar’s weakness, settling around 1.2880.
In the meantime, UK Retail Sales came in unchanged as expected in September, rising by 3.1% when compared to a year earlier. Core sales ex-fuel, however, were better than anticipated, up by 0.2% MoM and by 3.0% YoY. There’re no macroeconomic releases scheduled in the UK this Friday.
GBPUSD FUNDAMENTALS TODAY
3. Latest News & Analysis
Themes affecting the GBP/USD
SPECIAL YEARLY GBPUSD FORECAST
The Brexit uncertainty remains the biggest challenge for UK. Sterling is expected to weaken at the beginning of 2019 and rebound sharply after the Brexit uncertainty fades away. Sterling is set to chart a check mark symbol in 2019. With the UK government still working its way to the UK parliament with the Brexit agreement approval, the Brexit uncertainty is set to prevail the end of 2018 and the beginning of 2019.
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.
On the other
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.
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
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.
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.