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GBPUSD Outlook 22 March 2023Yesterday, the GBPUSD traded up to approach the 1.23 price area, a high last reached on 15th February. However, as the move was quickly reversed as the GBPUSD retraced to retest the 1.22 price level again. As the price failed to break below the support level and maintains above the upward trendline, the GBPUSD is likely to continue with its upward momentum. UK CPI data is due to be released today and is expected to signal a slowdown in inflation growth. While this might provide some short term price volatility, which could see the GBPUSD trade slightly lower, the BoE interest rate decision is still due tomorrow. The BoE is expected to increase rates by 25bps as it continues to target bringing inflation down to the 2% target level. Look for the GBPUSD to continue trading higher, to retest the 1.23 round number high, with the major key resistance level at 1.24.
Long
by JinDao_Tai
GBPUSD Outlook 20th March 2023The GBPUSD has been trading steadily higher from the 1.20 support area to find the key resistance level of 1.22 With further weakness anticipated for the DXY, the GBPUSD is likely to continue trading higher, especially if the price breaks out beyond the resistance level. Another reason that could see the GBPUSD trade higher is the market anticipation that the Bank of England (BoE) is likely to increase interest rates by another 25bps at the upcoming meeting. If the price breaks above 1.22, the next key resistance level is at 1.24, with a brief hesitation level at 1.2270.
Long
by JinDao_Tai
GBP - Weekly/Daily close will be key! GBP - Weekly/Daily close will be key! GBPUSD - At a very key resistance, we have NFP today that will shift the market. We did have GDP m/m Bullish 0.3 Higher than expected. I think when it comes to GBP there are very bearish views when it comes to there fundamentals and there rate hikes but I don't think the situation as bad as it's considered. What does this mean and how can we trade this opportunity? Well, we can first wait for daily close and see how we close and perhaps wait for pull back and get in long taking us back towards key resistance areas of 1.21 half areas and target areas 1.23. However, if we are fail to close above we are back within the range until further clarification. Don't forget to check minor pairs such as EURGBP & GBPAUD as commodity FX is lagging there are plenty of trading opportunities, including GB10Y W set up. Now we do have NFP, if that beats expectation we could get pull back in GBP. However, if it comes out lower than expected NFP I expect dxy to decline and majors to rise. And see how price reacts if it beats expectations and by how much and vice versa - that's what is very key! Now regarding GBP technical view: High: 1.21560 Low: 1.18420 Pattern: Wedge/Channel A break above the highs and 200/50 EMA I expect further bullish momentum and target area of 1.23 areas. If we are to break below of 1.18 handle then 1.15 is still on the table. However, at this current moment of time we are within the ranges and we have to respect that, in addition you could even go to lower time frame of 4hr and get better price! Trade safe and have a great weekend! Trade Journal
by Trade_Journal
GBPUSD - Now we wait... GBPUSD - Now we wait... GBPUSD within the ranges Highs: 1.22480 Lows: 1.18530 Keep in mind: we had BOE'S BAILEY: CAUTION AGAINST SAYING WE'RE DONE ON RATES & Let's not forget we aren't done with 'Brexit' as that tension tightens as per usual we saw EURGBP escalate higher whilst GBP we are within these ranges until prices give us clear direction. Technical view - It's very clear levels when it comes to price and we could even say there's pattern formed Highs: 1.22480 Lows: 1.18530 A break of highs, take us back to 1.24000 areas A break of lows, take us back to 1.17000 areas Don't forget to add alerts & stick to your own trade plan. Have a great day ahead, Trade Journal
by Trade_Journal
GBP/USD jumps on N. Ireland hopesThe British pound has posted sharp gains on Monday, after falling below the symbolic 1.20 level on Friday. In the European session, GBP/USD is trading at 1.2026, up 0.72%. In the UK, the economic calendar is unusually quiet this week, with no tier-1 releases. There will be a host of BoE members speaking, including BoE member Broadbent today and Governor Bailey and Chief Economist Pill later in the week. The BoE is widely expected to raise rates by 0.25% at the March 23 meeting, which would bring the cash rate to 4.25%. The UK economy appeared to be well on its way toward a recession, and the BoE signalled at the February meeting that it was considering easing up on the pace of rate hikes due to the slowing economy. The central bank may have to reconsider its policy after strong economic data was released last week. Services PMI climbed back into expansion territory in January, rising from 48.7 to 53.3. As well, GfK consumer confidence for February improved to -38, up from -43 a year prior. Although consumer confidence remains deep in negative territory, this was the strongest release since April 2022. The improvement in economic activity has caused the markets to fully price in 0.25% hikes in March and May, with a 33% likelihood of the cash rate rising to 5% in August. The UK left the EU in January 2020, but the vexing problem of the Northern Ireland border has continued to create friction between London and Brussels. There are hopes that the sides will announce as early as today that progress has been made, with speculation that a deal is very close to being reached. An agreement would be a massive victory for UK Prime Minister Sunak, who has been dealing with a lackluster economy and public worker strikes. GBP/USD is testing resistance at 1.2006. The next resistance line is 1.2082 1.1958 and 1.1864 are providing support
by OANDA
GBPUSD - a dovish BoE offers reasons to be short the GBP The BoE may have one more hike in them, but its 25bp at best with the market pricing terminal BoE rates at 4.27% by June – let’s see the next UK CPI print on 23 March and that could possibly seal the deal on a pause in the hiking cycle - the language from gov Bailey suggests a higher conviction of this playing out. UK gilts have found big buyers (10yr was -30bp, 2s -24bp) and GBPUSD 1-month implied volatility has dropped to 9.42% and eyes the 15 Dec lows of 8.52%. The inability of GBPUSD to break 1.2440 has cost the GBP bulls, and the new language from the BoE has seen price accelerate to the downside, with the range lows of 1.2263 giving way. With price now eyeing a daily close below the 5-day EMA, I am either flat or short on this pair, but longs are not for now. Trading the USD comes with an additional risk in the session ahead, as you’re effectively fighting positioning ahead of the upcoming US non-farm payrolls (00:30 AEDT) – the consensus here is for 190k jobs to have been created in Jan, with the U/E eyed at 3.6%, and average hourly earnings (AHE) at 4.3% – it’s the AHE variable that I think moves the USD and NAS100 most intently, as it did last month – the market is positioned for a softer wages print, so the pain trade comes on a print above 4.5%. Taking the USD out of the equation temporarily we see that GBPAUD has broken down and prints further lower lows – a tough cross to act on as we have the RBA meeting next week (Tuesday 14:30 AEDT), and that could inject some uncertainty to hold exposures - but the flow is certainly favouring shorts – GBPJPY is also one I favour lower, with important support kicking in around the 156.0 levels.
Short
by Pepperstone
1
GBP/USD sliding after dovish BoE hikeThe British pound has posted sharp losses on Thursday and continues to lose ground in the North American session. GBP/USD is trading at 1.2251, down 0.98%. The major central banks remain the focus of the market's attention. The Bank of England raised rates by 50 basis points, just one day after the Federal Reserve's 25-bp hike. This marked a second straight increase of 50 bp, bringing the cash rate to 4%. As with the Fed decision, the hike was expected, but investors found plenty to cheer about, resulting in the pound reversing course and losing ground. Governor Bailey said in a follow-up news conference that inflation pressures remained and inflation risks were skewed to the upside. Still, investors found plenty of reasons to be optimistic. Bailey said that inflation had turned a corner and noted that members had removed the word "forcefully" from its forward guidance statement. The BoE is now projecting that inflation will fall to around 4% by the end of the year and that the recession will be shallower than it had anticipated. The less pessimistic outlook for inflation and the economy sent risk appetite higher and pushed the pound lower. The markets were in a good mood after the decision, but there are plenty of problems ahead - inflation is above 10% and some half a million workers went on strike on Wednesday. The Fed raised rates by 25 basis points as was widely expected. The Fed noted that inflation has eased but reminded listeners that it remained much higher than the 2% target. Jerome Powell signaled that more rate hikes are coming and said he did not expect to cut rates this year. This was essentially a repeat of the hawkish message we've heard before, but the markets chose to focus on Powell saying that the disinflation process had started and that he expected another couple of rate hikes before winding up the current rate-hike cycle. This sent the US dollar broadly lower on Wednesday. Besides inflation, the Fed is focused on employment data, which will make Friday's nonfarm employment report a key factor in future rate policy. In December, nonfarm payrolls fell from 256,000 to 223,000 and the downturn is expected to continue, with an estimate of 190,000 for January. This release could result in further volatility in the currency markets on Friday. .
by OANDA
EURGBP - WEURGBP Another double bottom + TL as support! We could go further and add various other confluences but what's really important to implement your own trade plan in this idea! Double bottom, support 0.88350 areas. Drop below further than that, then I would re-think this idea. Overall stay above the support of 0.88350 and break of the key resistance that has been tested multiple times 0.88950 it's strong resistance but a break above I expect 0.89820 areas to be target. We do have ECB & BOE today... Have a great day ahead, Trade Journal
by Trade_Journal
Pound in holding pattern ahead of Fed, BOEIt has been a quiet week for the British pound, but that could change in a hurry, with the Fed announcing its rate decision later today, followed by the Bank of England on Thursday. It's a virtual guarantee that the Federal Reserve will raise rates at today's meeting by 25 basis points. This would bring the benchmark rate to 4.75%. The Fed has had some success bringing down inflation, which fell to 6.5% in December. Inflation has de-accelerated for six straight months, which certainly sounds like it has peaked. Still, the Fed won't be using the "P" word anytime soon for fear of an excessive reaction from the markets. The markets are counting on a dovish pivot from the Fed, given the increasing signs that the US economy is slowing down. Will the Fed stick to its hawkish stance at the meeting, or will it present a more dovish stance? If the Fed signals that there are no plans to pivot, the US dollar should gain ground. Conversely, any hints about an easing in policy, such as a cut in rates later this year, would raise risk appetite and weigh on the dollar. The Bank of England follows the Fed with its own rate announcement on Thursday. The central bank is widely expected to raise rates by 50 basis points, which would bring the cash rate to 4.0% and would mark a 10th straight rate increase. Given the weak economy and sharp drop in housing prices, there is an outside chance of a modest 25-basis point hike. Despite the steep tightening cycle, inflation is running at a sky-high 10.5%, so the BoE is in no position to talk about a pause in rate hikes without inflation heading lower. Wage growth is becoming a major concern for the BoE, and today's massive strike by public servants for better pay won't help matters. Wages haven't kept up with soaring inflation, which is why we're seeing disgruntled workers go on strike, but wage growth is close to a record pace and is a major factor behind inflation which is still in double digits. GBP/USD is putting pressure on support at 1.2289. Next, there is support at 1.2203 There is resistance at 1.2369 and 1.2474
by OANDA
Pound jumps as inflation easesThe British pound is in full flight upwards on Wednesday. In the North American session, GBP/USD is trading at 1.2393, up 0.86%. UK inflation eased for a second straight month in December. Headline CPI dipped to 10.5%, down from 10.7% in November and just below the forecast of 10.6%. Core CPI, however, did not show an improvement as it remained unchanged at 6.3%. The downtrend is welcome news, but inflation still remains stubbornly high after hitting 11.1% in October, a 41-year high. The Bank of England has raised rates to 3.50% but clearly, more work needs to be done. The labour market remains robust, with wage growth climbing to 6.4% in December, up from 6.2% in November and brushing past the forecast of 6.1%. This is well below inflation levels, much to the chagrin of workers, but it is much too high for the BoE, which is focussed on curbing inflation. The BoE meets next on February 2nd and the markets have priced in a second-straight 50-bp increase. The BoE will also release updated economic forecasts, which could play a key role in the central bank's rate policy over the next several months. US consumers cut back on spending in December for a second consecutive month. Retail sales fell 1.1%, driven lower by a decline in vehicle sales due to rising interest rates for vehicle loans, as well as lower gas prices. This was lower than the November reading of -1.0% and the consensus of -0.8%. Core retail sales also declined by -1.1%, compared to -0.6% in November and the forecast of -0.8%. The disappointing numbers have sent the US dollar lower against the majors, as speculation rises that the Fed may have to ease up on the pace of rate hikes due to a weakening economy. GBP/USD has pushed above resistance at 1.2292 and 1.2352. The next resistance line is at 1.2455 There is support at 1.2189 and 1.2129
by OANDA
Cable Pushing Higher After UK CPI Data Cable is back in an uptrend after a capitulation back in September, with the current price making some extended move up after breaking above 1.2 psychological level. We see Cable unfolding a five-wave bullish impulse from the lows, with more upside coming after recent pullback from the highs that unfolded as a correction. Ideally, that was subwave four that can not send the price back into an uptrend after a break above 1.2150 resistance. Ideally thats now the beginning of a new fifth wave higher. Some spectators are also betting on GBP as they believe BoE should be more hawkish with CPI at 10.5%.
by ew-forecast
GBPCHF:Good opportunity on Policy DivergenceSwitzerland National Bank officially announced the intervention in the FX market to stop the Swiss Franc depreciation, which confirms a regime change for the SNB. and their Hawkish monetary policy will strengthen the CHF and aim for a lower inflation, meanwhile the Bank of England hiked the rates slowly and with hesitations despite a very high inflation which should contribute to a strong CHF against GBP. Technically we noticed a breakout of the Daily trend, we will look into selling the retrace of the breakout around the monthly zone of 1.129, with a SL above previous highs as in the swing trades the movements are more violent so a proper risk management should be considered. Remember that whatever is your reasoning for the market and no matter how strong are the analysis there is always a probability of losing as trading is more of a probability field so make sure to always consider a good RR, risk small and aim higher. Your questions are very welcome!
Short
by JoeChampion
7
What happened with the Pound in 2022!The GBPUSD had so much potential heading into 2022, as markets anticipated some possibility of the UK navigating through the Brexit ordeal. The BoE was one of the first central banks to increase rates, BUT YET , we saw the Pound getting pounded down, from the 1.35 price area down to the HISTORIC low of 1.036, with huge speculation that the GBPUSD could even reach PARITY . In addition to what we already know (you can read more about it in the links below) DXY strength Russian-Ukraine conflict EURUSD reaching parity The decline in the GBPUSD was also driven by SIGNIFICANT political chaos. Prime Minister Boris Johnson was replaced in September by Liz Truss, who was replaced in October by Rishi Sunak (A change of 3 Prime Ministers in the space of 2 months) On 23rd September , UK Finance Minister Kwasi looked to boost the country's economic growth by introducing a series of tax cuts, totaling 45 billion pounds by 2026-27. However, the market was spooked by the scale of the fiscal giveaway and the immediate reaction was to sell UK govt bonds. While the FTSE 100 fell to its lowest level since March, the ground gave way on the GBPUSD as it crashed from the 1.1255 price level down to the 1.0360 historical low (23rd to 26th September) Further decline in the GBPUSD was saved by a quick intervention from the BoE as it pledged an unlimited long-dated bond-buying program to restore stability and orderly market conditions. Fortunately for the UK, the rapid change in the Prime Minister, BoE intervention, U-turn in tax policy, and introduction of a new austerity package has had some positive impact on the GBPUSD. In November, the new Finance Minister Jeremy Hunt released a series of spending cuts and tax rises in an attempt to plug the hole in the public finances. The GBPUSD has recovered strongly from the 1.0360 price level in September to reach the 1.25 price area in December. However, the UK pound is not out of the woods yet! Inflation in the UK still stands at 10.7% with interest rates at 3.50%. AND there is dissent within the BoE as the most recent rate decision votes indicated that 2 members voted to hold rates at 3.00% (7 voted to hike). Could the BoE risk a pivot at this point? Is there enough momentum in the current slowdown of inflation growth, that it could reach the BoE's target level? Stay Tuned for the 2023 outlook!
by JinDao_Tai
GBP/USD tumbles toward the 20-day SMA after Fed, BoE The GBP/USD dropped sharply on Thursday, mainly due to a stronger U.S. Dollar at critical times for currency markets, following decisions from the Federal Reserve, the European Central Bank and the Bank of England. As expected, the Fed, the ECB and the BoE raised key interest rates by 50 basis points, amid high inflation. There were no surprises there. At the Fed, Chair Powell maintained a somewhat hawkish tone, which, together with the macroeconomic projections, seem to forecast higher interest rates for a longer time than previously anticipated. The dollar fell initially but then reversed and strengthened during Powell's comments. On Thursday the appreciation took another magnitude, with the added bonus of risk aversion across financial markets. Main Wall Street's indexes fell by more than 2% on worries about the global growth outlook at times of monetary tightening. Those fears about growth are more significant in the United Kingdom. The outlook led two Bank of England's Monetary Policy Committee members to vote against raising interest rates. The other seven members voted for a hike. Two votes for "no change" were the surprise, that weighed on GBP. The pound weakened further following the European Central Bank meeting. U.S. economic data released on Thursday was mixed. Friday will be the turn of the PMIs across the world, the first numbers of activity during December. Poor readings may fuel risk aversion, which would favor the dollar against the pound. The GBP/USD uptrend is still on, but it has lost momentum. Thursday's reversal is a first sign of a potential top around 1.2450. The mentioned area capped the upside during the last three trading days. The decline extended to 1.2156, slightly above the 20 and 200-day Simple Moving Average. A consolidation below 1.2100 should point to more losses in the short term. In order to recover bullish strength, GBP/USD needs to break above the 1.2320 area. Such a scenario would again expose the critical resistance at 1.2450. A daily close above this last level could anticipate the resumption of the rally.
by Alex_Boltyan_FXAnalyst
ECB vs BoE: What's next for EUR/GBP?The European Central Bank (ECB) and the Bank of England (BoE) both raised interest rates by 50 basis points at their final meetings of the year. The Eurozone's policy rate was hiked to 2.5%, the highest in fourteen years, and the UK's to 3.5%, the highest since late 2008. In contrast to the relatively dovish BoE meeting, the ECB meeting was substantially more hawkish than the market had anticipated, prompting the EUR/GBP cross to surge. In a divided vote, the BoE decided to raise rates by 50bps, with one member (Mann) pressing for 75bps and two members (Tenreyro and Dhingra) preferring to maintain current rates. According to the BoE statement, more increases in the Bank Rate may be necessary due to ongoing inflationary pressures fueled by a tight labour market. In the first quarter of 2023, UK CPI inflation is expected to fall as household spending and property market indicators weaken. Even if the ECB lowered its speed of rate rises from 75bps to 50bps, it made it clear that interest rates will still have to climb consistently and by a steady pace to reach restrictive levels to get inflation back to 2% quickly. The ECB also indicated that quantitative tightening will begin in March 2023. The ECB will not reinvest all expiring securities' principal payments in the Asset Purchase Programme (APP), meaning its asset portfolio of eurozone bonds will fall at an average pace of €15 billion per month until Q2 2023, with the subsequent rate established over time. During the press conference, ECB President Lagarde reiterated that the ECB will rise with tenacity and that 50bps may be the right rate hike for the next meeting and the two after that. She also hinted that once the peak is achieved, "it won't be enough to hit and withdraw," and that high interest rates will be in place for a longer period of time. Historically, the interest-rate gap between the Euro Area and the UK has been one of the key driver behind the EUR/GBP exchange rate. Market reactions to the BoE and ECB meetings: Yields differential matter Before today's meeting, the market was highly dovish on the ECB, pricing in a peak of 2.8% next year, while it had already built in hawkish expectations on the BoE, pricing in a peak of 4.6% in the Bank Rate in August 2023. German bond yields soared by 15 basis points after the ECB rate announcement and during Lagarde's press conference, but UK gilt yields stayed nearly unchanged from pre-BoE meeting levels. The negative yield spread between German and UK sovereign bonds shrank throughout the curve today as investors repriced ECB rise expectations. The 2-year German-UK yield gap narrowed to -1% and the 10-year one to -1.2%.  In the coming weeks/days, market expectations for the ECB rate may continue to rise as ECB hawks are likely to reiterate their aggressive stance. The Bank of England's market pricing may stay broadly stable, given it has already incorporated heightened expectations ahead to the meeting. This may indicate that the negative yield disparity between German and British bonds will continue to narrow, exerting upward pressure on the euro-pound exchange rate. A further 30 basis point reduction in the negative yield spread between 2-year German bonds and UK gilts, lowering it from -1% to -0.70%, might drive EUR/GBP to 0.89 or near to the psychologically important level of 0.90.
by Capitalcom
GBP/USD edges higher, US PPI loomsThe British pound has posted slight gains today. In the European session, GBP/USD is trading at 1.2257, up 0.32%. After a rather uneventful week for the US dollar, next week could be marked by plenty of action, with a host of key releases on both sides of the pond. The BoE and Federal Reserve are expected to deliver 50 bp hikes, and we'll get a look at the latest inflation data from both the UK and the US. Like the Federal Reserve, the BoE has also circled inflation as public enemy number one, but Governor Bailey doesn't have the luxury of a strong economy to work with. With GDP in negative territory and inflation at a staggering 11.1%, the economy may already be experiencing stagflation, but Bailey can ill afford to allow inflation expectations to become more entrenched. Winter is likely to be a season of discontent, with railroad and other public workers threatening to go on strike, as the cost-of-living crisis has hit households hard. The Federal Reserve will be keeping a close eye on the US inflation report, which will be released just one day before the Fed's policy meeting. Inflation has eased over the past several months, but the Fed has been very cautious and is still reluctant to declare that inflation has peaked. The Fed has not looked kindly on market exuberance triggered by soft inflation reports, and paraded a stream of Fed members to remind investors that inflation remains unacceptably high and the fight to curb inflation remains far from over. The markets will get a look at US inflation data later today, with the release of the Producer Price Index (PPI). The index is expected to drop to 7.4%, down from 8.0%. A decline in PPI would reinforce expectations that we'll see a drop in CPI as well next week. 1.2169 and 1.2027 are the next support levels GBP/USD is testing support at 1.2169. Below, there is support at 1.2027
by OANDA
1