Chart of the Day GBPUSD
GBPUSD Frustrating Bulls & Bears, Clarity Coming
Markets are attempting to stabilise again, after the US Fed threw in a surprise inter-meeting 50bps rate cut yesterday, while Joe Biden made a surprise comeback on Super Tuesday in the race to be the Democratic nominee for November’s Presidential election. US equities have settled into a wide range, US Treasury yields set new lows post the Fed cut and remain under pressure, while the broader USD has recovered a little – the Bloomberg USD Index sitting around the midst of the range we have been in since 2016.
Data out of China continue to reflect the virus effect, with the latest PMIs from Caixin seeing services nosedive to 26.5 and the composite to 27.5. While Australian Q4 GDP was stronger than expected and German retail sales rebounded in January, both have been discounted as backward looking. Focus today is very much on the Bank of Canada, with a rate cut expected after the RBA and Fed moves this week. But it is unclear if the move will be by 25 or 50bps. There is no press conference after today’s meeting but Governor Poloz is scheduled to speak tomorrow.
Today’s testimony by incoming BoE Governor Bailey to a HoC Committee will be watched for indications of how he thinks the bank should react to the virus crisis. Yesterday Governor Carney promised a “powerful and timely” response by global policymakers but his comments were short on specifics. Bailey’s comments will also probably avoid details but he is bound to be asked whether the Bank should follow the Fed. BoE Deputy Governor Broadbent also speaks tonight.
From a technical & trading perspective the GBPUSD continues to correct against its post UK election and near term Brexit resolution impulse move. The price action of late has frustrated both bulls and bears as is typical of complex corrections. It appears there is the potential for another sting in the tail with prices forming a near term platform which allows a window for another wrong footing move higher as we hold 1.27 look for a spike to retest range resistance to 1.32 from here we should see a final leg lower to wash out newly minted longs and once again suck in bears only to find nids between 1.25/1.26 create a final base for another leg of sustained upside. A failure to hold 1.27 would negate this view and open a deeper decline to immediately test the 1.26/1.25 objective from current levels.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Roz has been engaged in the financial markets since 2017, specializing in Foreign Exchange, Before joining to FOREX IN WORLD she start to learn forex trading related information.
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