MO GBPUSD – 12.10.2018
38652
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MO GBPUSD – 12.10.2018

Long Term Overview:

Economic Analysis

According to a leaked draft Brexit Document, the EU and U.K. is said to build on a “Single Customs Territory”. The document allegedly includes that the EU is to recognise the U.K.’s independent trade policy, while stating determination to replace the Northern Ireland backstop in the future. This leaked draft document led to an exponential upsurge in Buyers present within the pound market in recent days. However, the prospect of a Brexit Deal getting through U.K. Parliament is shaping up to be of low probability. As a result of this, the Pound may be subsequent to further indecision in the medium term.

 

Strength in the Dollar is forecast to see a further growth after the Federal Reserve’s FOMC Chairman Powell stated that Interest Rates “are not quite at normalisation”. implied once again that FOMC Interest Rate policy is likely to remain relatively hawkish, after FOMC Powel turning Dovish in the most resent Interest Rate Decision; preventing excessive inflation in a firming economic environment. Interest rate normalisation is expected to be in the region of 2.50% to 3.50% which may reinforce overall positivity in the greenback. Not only this, but in recent months, the United States and Canadian government have forged a new trade agreement to replace NAFTA, preserving President Trump’s ability to impose a 25 percent global tariffs on auto parts from Canada and Mexico – The USMCA trade deal is set to strengthen the dollar in the mid – long term, as a result of a combination of lower market uncertainty and stabilisation of the continents long standing trading relationships.

 

With the combination of future forecast of market uncertainty within the Pound, paired with the relative resumption forecast of the US Economy seeing further growth in the medium – long term, this suggests that the GBPUSD may continue to fall in the near term.

Long Term Analysis

GBPUSD is short on all higher time frames displayed, with bearish volume increasing on all charts shown. Price closed on a shooting star candlestick the previous month, paired with this currency pair crossed red over green on the Monthly MacD Indicator, this may suggest Cable has a probability for seeing a resumption of price to the short side, nearing previous lows at the 1.2110 region, in the next financial quarter. This is in conjunction with strength in the Dollar is forecast to see a further growth after the Federal Reserve’s FOMC Chairman Powell stated that Interest Rates “are not quite at normalisation”. implied once again that FOMC Interest Rate policy is likely to remain relatively hawkish.

 

Decision Point: push below previous lows nearing the 1.2768 area

Long Term Trend: Short

Channel Range: N/A

Possible Bias: Short

Medium Term Analysis

Bias is short on all time frame charts presented. However, Cable is currently seeing a large amount of indecision; suggested by the current formation of a doji on the Weekly and Bi-Weekly charts. This indecision within the market may be due to the uncertainty in the markets ahead of the USD Nonfarm Payrolls Event on Friday 07th December 2018. Though current market indecision is currently persisting, a shooting star candlestick has closed on the previous Monthly Candlestick. This may suggest that after the current indecision, Sellers could continue to drive price to the short side, nearing previous lows around the 1.2635 area, in the next couple of weeks.

 

Decision Point: Close below a previous low nearing the 1.2852 area

Long Term Trend: Short

Channel Range: N/A

Possible Bias: Short