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GBP/USD attempts to bounce from key support area

GBP/USD bulls are attempting a correction from an important support area near the midpoint of the 1.1400 area, with the price recovering from a low of 1.1462 and now testing the bear’s commitments at 1.1500.

Weekly Charts

GBP/USD’s down trend resumed last week by breaking 1.1404 support. Initial bias stays on the downside this week for 78.2% projection of 2.11537 to 1.3524 from 1.7100  On the upside, break of 1.1750 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

based on current momentum, fall from 1.4248 (2018 high) is probably resuming long term down trend from 2.1161 (2007 high). Sustained break of 1.1400 will target 61.8% projection of 1.7100 (2014 high) to 1.1400 (2020 low) from 1.4248 (2021 high) at 1.0675. This will remain the favored case for now as long as 1.2292 resistance holds78.205

 

Meanwhile, the Bank of England is also expected to hike by another 50bp on Thursday 22 September, but it remains a close call between 50bp and 75bp due to the rising recession risk. Analysts at Danske Bank argue that the BoE has had a tendency to surprise to the dovish side at recent meetings. ”Additionally, BoE was the first G10 central bank to forecast a recession by Q4 2022 at its last meeting, while using a far more dovish market pricing as policy input than what is currently priced.”

The analysts expect 50bp hikes in September, November and December followed by a final 25bp hike in February 2023. ”The endpoint is thus lifted to 3.25% (from 2.50%). We see the possibility for further hikes in 2023, if we see underlying inflation pressures to prove persistent.”

Politically, the analysts cite the newly elected Prime Minister Liz Truss; plans to add upside to inflation down the road with inflation possibly proving to be more persistent. ”This could highlight the need for further hikes in 2023, yet amid the deficit funding uncertainty we still lean towards 50bp next week.”

Daily Chart

Divergence ideas

Open: 16/09/2022

Economic News:

06:00

 

GBP

Retail Sales (MoM)(Aug) 

 

-1.6%

-1.28

-0.5%

0.4% 

PRICE ENTRY :1.1401

S/L : 1.3473

T/P: 1.16816

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GBP/USD Neutral

Intraday bias in GBP/USD remains neutral for the moment. On the downside, decisive break of 1.1404/9 will resume larger down trend. Next target is 61.8% projection of 1.3748 to 1.1759 from 1.2292 at 1.1063. On the upside, above 1.1737 minor resistance will resume the rebound from 1.1404 to 55 day EMA (now at 1.1904).

Weekly Charts

  • GBP/USDIn the bigger picture, based on current momentum, fall from 1.4248 (2018 high) is probably resuming long term down trend from 2.1161 (2007 high). Sustained break of 1.1409 will target 61.8% projection of 1.7190 (2014 high) to 1.1409 (2020 low) from 1.4248 (2021 high) at 1.0675. This will remain the favoured case for now as long as 1.2292 resistance holds.
GBP/USD recovered well ahead of 1.1404/9 support zone and intraday bias is turned neutral first. On the downside, decisive break of 1.1404/9 will resume larger down trend. Next target is 61.8% projection of 1.3748 to 1.1759 from 1.2292 at 1.1063. On the upside, above 1.1737 minor resistance will resume the rebound from 1.1404 to 55 day EMA (now at 1.1917).

Daily Chart

Divergence Signals

Open: 16/09/2022

PRICE ENTRY : 1.4010

S/L : 1.13473

T/P: 1.16816

Economic News:

06:00

 

GBP

Retail Sales (MoM)(Aug) 

 

-1.6%

-1.28

-0.5%

0.4% 

Read more.

Open: 

PRICE ENTRY :

S/L :

T/P:

Read more.

Open: 

PRICE ENTRY :

S/L :

T/P:

Read more.

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