Daily Market Analysis and Forex News
Mid-Week Technical Outlook: GBP
Sterling remains in the market headlines for all the wrong reasons thanks to growing uncertainty and confusion from not only the Bank of England but the UK government.
Pound bulls were dealt a heavy blow yesterday after Andrew Bailey warned that the central bank would not extend its emergency intervention beyond this week. However, prices later rebounded on reports that the BoE could extend bond purchases past Friday’s deadline. It does not end here. The prospects of more humiliating U-turns on the mini-Budget injected bulls with fresh confidence, sending the GBPUSD roughly 1% higher as of speaking. Despite the recent gains, bears remain in the vicinity thanks to the confusion with the path of least resistance for sterling pointing south.
Our focus this afternoon falls on pound crosses and the tool of choice will be none other than technical analysis.
GBPUSD not out of the woods yet
The British pound could be gearing for a steeper decline, especially after the bearish daily candle created on Tuesday. A breakdown below 1.0925 could signal a selloff towards 1.05200. Should 1.0925 prove to be reliable support, prices may venture towards 1.1300.
EURGBP trapped within a range
Despite the recent choppiness, the EURGBP remains trapped within a range on the daily charts with support at 0.8720 and resistance at 0.8850. A breakout could be on the horizon but this may require a fundamental spark. Should prices sink back below 0.8720, a decline towards 0.8650 and lower could be on the cards. Alternatively, a strong break above 0.8850 could suggest a move toward 0.9050.
GBPJPY presses against 50 SMA
After experiencing a sharp decline yesterday, the GBPJPY has clawed back almost all of its losses. Nevertheless, prices are back within a range with support at 160.00 and resistance at 164.00. A break below 160.00 may open a path back towards 158.00. Should bulls push the currency pair above 162.00, the GBPJPY could challenge 164.00.
GBPAUD eyes 1.7800
Prices are turning bullish on the daily charts with the first key level of interest around 1.7800. This is just above the 200-day Simple Moving Average which could act as a very tough resistance. A strong breakout above this point could encourage an incline toward 1.8100. Alternatively, sustained weakness below 1.7800 may signal a selloff towards 1.7350.