British Pound Outlook
The British Pound has risen against the Euro, Dollar and other major currencies following a Bank of England deicsion to boost support for the lockdown-ravaged UK economy, but upside will likely be limited by news EU and UK negotiators have confirmed significant differences remained between the two sides.
The Bank of England on Thursday announced it would boost quantitative easing by £150 billion, an amount significantly greater than the £100BN markets were anticipating,
The expansion of its asset buying programme takes the total to £895 billion and interest rates were left unchanged at 0.10%.
Both result came from an unanimous 9-0 votes on the Monetary Policy Committee.
The bigger-than-expected boost to quantitative easing would typically be seen as a potentially Sterling-negative development, but that no mention was made of negative interest rates appear to have been met with relief.
Despite gains made by the Pound following the Bank of England announcement, analysts warn gains might be limited. Indeed, the latest news out of Brussels and London suggests a post-Brexit trade deal is not yet assured, and the Pound should therefore remain on edge over coming days as a result.
EU Chief Negotiator Michel Barnier ambassadors from EU member states on Wednesday on the latest developments in negotiations, saying “despite EU efforts to find solutions, very serious divergences remain in Level Playing Field, Governance & Fisheries. These are essential conditions for any economic partnership.”
He added the European Union is prepared for all scenarios.
UK Chief Negotiator David Frost on Wednesday briefed UK Prime Minister Boris Johnson on the status of talks.
Media reports suggest the negotiating teams will now take stock before reconvening in London on Sunday.
Talks are likely to continue for a further two weeks, with a summit of EU leaders on November 19 being widely tipped by commentators to present itself as the key moment where a Brexit breakthrough is achieved.
However, Johnson would be expected at some point before then to lay the foundations for any breakthrough via discussions with EU Commission President Ursula von der Leyen and then with other EU leaders.
Most notably, any discussions with France’s President Emmanuel Macron is likely to be instrumental.
There are no days set aside for any such talks but past precedent suggests the week leading up to the November 19 summit will be a busy one and will likely be characterized by heightened volatility in Sterling.
GBP/US Dollar Exchange Rate
Today’s Forex Rates
GBP/US Dollar FX Polls
Economic Events
Technical Indicators
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1.34.
The projected lower bound is: 1.29.
The projected closing price is: 1.31.
Candlesticks
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with FOREX GBP=) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.
During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 78.0760. This is not an overbought or oversold reading. The last signal was a sell 18 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 57.94. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 57 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 135.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 3 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX GBP= closed down -0.002 at 1.313. Volume was 66% below average (consolidating) and Bollinger Bands were 39% narrower than normal.
Open High Low Close Volume 1.314 1.316 1.311 1.313 44,998 Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish Moving Averages: 10-period 50-period 200-period Close: 1.30 1.30 1.27 Volatility: 11 11 14 Volume: 144,913 141,584 130,775
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
FOREX GBP= is currently 3.3% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on GBP= and have had this outlook for the last 17 periods.