Awaiting the BoE 's announcement today, read what our daily guest blogger Matthew Clark has to say about the cable.
The GBP traded lower yesterday for the 5th day in a row ahead of today’s Bank of England interest rate decision. The weakness in the GBP isn’t really based on anything fundamental. In fact the manufacturing PMI beat estimates, and the services PMI, despite being slightly weaker than expectations coming in at 56.7, was still above the important 50 level showing that the services industry (which the economy of the UK is heavily reliant on) is still expanding.
The US dollar index pushed to new highs as the euro broke 1.1097, making fresh 11-year lows in line with our expectations within the final push developing in wave 5. In the US the ISM non-manufacturing index came out higher than expected, marking the second improvement in a row. The chairman said that gains in employment were driving the services industry and pushing the expectations higher for tomorrows non-farm payrolls number.
Bank of England governor Carney announced last month that oil has kept inflation in check and even if they start to see inflation remain low it does not mean that rates will stay this low indefinitely. The market is obviously expecting a rate rise later in the year, but no change today. The recent sell-off, we believe, is a retracement from the last months' up move.
If we look at our longer-term chart, we have been anticipating a multi-week rally to take place with the RSI being oversold for the five months between September and the beginning of February. Taking into account the 7-months sell-off in the GBP/USD, we believe that the recent retracement is too short, and the move up to 1.5550 is the wave A of a multi-week correction from the 1.7192 highs.
If we break the retracement down from the January 23rd lows it was clear from the 4-hour charts that the GBP/USD was due for a sell-off with triple divergence clearly seen in the MACD. Taking into account yesterday’s move lower reaching the 50% retracement as well as the breakout from the 12th of February at 1.5260, we will are starting to look for a bottom in the wave B to form. Obviously ahead of tomorrow’s NFP we would not try and catch the falling knife but start to look for short-term turning patterns down to 1.5180.
It is not necessary to try and pick a bottom, wait for the indicator to show that one has been made. From the long-term chart we can see that when this does stop dropping the next leg up should have a minimum target at the 38.2% retracement area at 1.5850, with a possible extension all the way up to the 1.6200 area. However we do believe that with the upcoming election in May it will be difficult to reach those levels. Once the rally does start, expect around 1 month of rallying before the news and uncertainty regarding the governance of the United Kingdom starts to weigh again on the pound.
The GBP traded lower yesterday for the 5th day in a row ahead of today’s Bank of England interest rate decision. The weakness in the GBP isn’t really based on anything fundamental. In fact the manufacturing PMI beat estimates, and the services PMI, despite being slightly weaker than expectations coming in at 56.7, was still above the important 50 level showing that the services industry (which the economy of the UK is heavily reliant on) is still expanding.
The US dollar index pushed to new highs as the euro broke 1.1097, making fresh 11-year lows in line with our expectations within the final push developing in wave 5. In the US the ISM non-manufacturing index came out higher than expected, marking the second improvement in a row. The chairman said that gains in employment were driving the services industry and pushing the expectations higher for tomorrows non-farm payrolls number.
Bank of England governor Carney announced last month that oil has kept inflation in check and even if they start to see inflation remain low it does not mean that rates will stay this low indefinitely. The market is obviously expecting a rate rise later in the year, but no change today. The recent sell-off, we believe, is a retracement from the last months' up move.
If we look at our longer-term chart, we have been anticipating a multi-week rally to take place with the RSI being oversold for the five months between September and the beginning of February. Taking into account the 7-months sell-off in the GBP/USD, we believe that the recent retracement is too short, and the move up to 1.5550 is the wave A of a multi-week correction from the 1.7192 highs.
If we break the retracement down from the January 23rd lows it was clear from the 4-hour charts that the GBP/USD was due for a sell-off with triple divergence clearly seen in the MACD. Taking into account yesterday’s move lower reaching the 50% retracement as well as the breakout from the 12th of February at 1.5260, we will are starting to look for a bottom in the wave B to form. Obviously ahead of tomorrow’s NFP we would not try and catch the falling knife but start to look for short-term turning patterns down to 1.5180.
It is not necessary to try and pick a bottom, wait for the indicator to show that one has been made. From the long-term chart we can see that when this does stop dropping the next leg up should have a minimum target at the 38.2% retracement area at 1.5850, with a possible extension all the way up to the 1.6200 area. However we do believe that with the upcoming election in May it will be difficult to reach those levels. Once the rally does start, expect around 1 month of rallying before the news and uncertainty regarding the governance of the United Kingdom starts to weigh again on the pound.
This article is written by Matthew Clark who is the owner of
Global Forex Pros.
ABOUT THE AUTHOR: Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker. Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real-time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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