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British Pound Price Forecast: GBP/USD, GBP/JPY, EUR/GBP

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British Pound, GBP, GBP/USD, GBP/JPY, EUR/GBP Talking Points:

  • GBP/USD put in a two-week streak-of-strength but ran into a wall of resistance earlier this week.
  • While USD may have a fairly chaotic backdrop around the election, there may be more compelling setups on either side of Sterling by looking towards GBP/JPY and EUR/GBP.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

While the headlines have been far from joyful reading in the UK of recent, one might not know better if looking at the GBP/USD chart coming into this week. The British Pound looked downright strong after testing a big spot of support in late-September, and this led to a two-week-rally that held through this week’s open.

I had looked at that support zone in late-September, with GBP/USD gearing up for yet another test of the 1.3000 psychological level. That test has so far failed as prices have pulled back, attempting to cauterize yet another area of higher-low support. Helping to hold the lows over the past two days is a key area of support just below the 1.2900 handle, as 1.2896 is the 50% marker of the 2018-2020 major move in the pair. Also of relevance are the 76.4 and 78.6% Fibonacci retracements of the December-March major move, as these prices have now helped to hold multiple resistance inflections so far this week; and this comes after a fairly clear show of support in the same area in the first-half of August.

GBP Forecast

GBP Forecast

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GBP/USD Eight-Hour Price Chart

GBPUSD GBP/USD Eight-Hour Price Chart

Chart prepared by James Stanley; GBPUSD on Tradingview

The above chart can be construed in either a bullish or bearish manner. On the bullish side, the focus would be on the series of higher-highs and lows that’s built-in since late-September, going along with a support inflection at a familiar level.

However, this may be a brewing bear flag with that bullish theme merely a corrective portion of a bigger-picture bearish picture. This argument would be supported by the fact that the bullish trend ran into a brick wall of support around the 1.3000 resistance items.

Also of consideration – the US Dollar is going through its own themes at the moment as we get closer and closer to the election. For traders looking to take-on exposure in the British Pound, there may simply be more amenable pastures elsewhere, which I’ll look at below.

GBP/JPY Tests Big Support

If looking for long-GBP exposure, GBP/JPY may present a compelling argument. Similar to GBP/USD above, the pair dug-out of support in late-September before going on a two-week-run of strength. That strength continued through this week’s, with sellers showing up on Tuesday to push price action back down to a key area of support.

The support here is defined by the 61.8% retracement of the 2016-2018 major move; and this level has already seen numerous inflections – on either side – so far in 2020 trade. Given the longer-term scope of this support, it may be a bit more attractive than the support looked at above in GBP/USD. And if buyers can hold the lows here through today, with respect to yesterday’s swing-low, the door can remain open for topside strategies in the pair.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 24% -13% 1%
Weekly -14% -4% -9%

GBP/JPY Four-Hour Price Chart

GBPJPY Four Hour Price Chart

Chart prepared by James Stanley; GBPJPY on Tradingview

EUR/GBP Presents Compelling Scenario for GBP-Weakness

For those looking for short-GBP exposure, there may be some brewing opportunity around EUR/GBP. The pair jumped up to a fresh high in early-September but it’s been a slow grind lower ever since. Along the way, a key observation has presented itself, which is the fact that sellers in the pair have been far more aggressive around highs or at resistance than what’s shown around support.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily -13% 8% -4%
Weekly 1% -16% -8%

This has allowed for the build of a falling wedge pattern, which will often be approached with the aim of bullish reversals. When this pattern is incorporated with the .9000 psychological level sitting just underneath price, along with the .9033 Fibonacci level, there could be multiple reasons for buyers to defend support here. This can keep the door open for bullish breakout potential in the pair and this would be one of the more interesting ways to investigate GBP-weakness given current dynamics.

To learn more about the falling wedge pattern, check out our chart patterns section within DailyFX Education.

EUR/GBP Eight-Hour Price Chart

EURGBP Eight Hour Price Chart

Chart prepared by James Stanley; EURGBP on Tradingview

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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Dollar Edges Higher After Presidential Debate By Investing.com

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© Reuters.

By Peter Nurse

Investing.com – The dollar posted small gains in early European trade Friday, following the final presidential debate between U.S. President Donald Trump and Joe Biden before the Nov. 3 election.

At 2:55 AM ET (0655 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 93.082, bouncing back from the seven-week low seen earlier in the week. However, it remains 0.6% lower for the week.

Elsewhere, was down 0.2% at 1.1793, fell 0.2% to 1.3054, while was down 0.1% at 104.72.

The final debate between the two presidential candidates took place in Nashville, Tennessee late Thursday and was more restrained than the chaotic first debate, with the debate centering more on policy rather than personal attacks.

That said, “people are just closing out longs ahead of the election just in case Biden isn’t [elected] … we’re coming into that eye of the storm now where it takes a bit of a brave soul to put on new positions ahead of the election,” Pepperstone head of research Chris Weston told Reuters.

Traders are also keeping an eye on negotiations between House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over the potential for a new substantive coronavirus relief bill, with Pelosi expressing optimism that a consensus could be reached.

“Market players will take their cue from U.S. political developments as well as the sustained acceleration in Covid-19 cases around the globe as the fall ushers in a new wave of infections as predicted by experts,” said analysts at ING, in a research note.

Elsewhere, was largely flat at 6.6843, with the yuan holding onto gains against the greenback as Wang Chunying, spokeswoman for China’s State Administration of Foreign Exchange, told a news conference that the yuan has been more stable than expected. This comes despite the Chinese currency reaching its highest level against the dollar in 27 months on Wednesday.

The Chinese currency could see sharp gains if Joe Biden wins November’s U.S. presidential election, according to Citigroup (NYSE:) strategists. Chinese exporters would expect a more predictable U.S.-China trade relationship in that circumstance, and will start selling their dollar cash piles to buy yuan, the strategists wrote in a note dated Thursday.

Additionally, rose 0.2% to 7.9478, the day after Turkey’s central bank raised the upper bound of its interest-rate corridor but unexpectedly left its benchmark rate on hold.

The central bank surprised investors last month with a 200-basis-point increase and has since tightened policy further by restricting funding at the benchmark rate, forcing banks to borrow using costlier options. 

But this hasn’t stopped the currency’s decline, with the lira falling another 2% against the dollar since the September rate decision.

“Exchange rate developments are likely to remain as one of the key determinants of CBT policy in the period ahead given ongoing geopolitical issues and US elections-related sensitivities,” ING added.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Both sides want EU trade deal but UK sovereignty must be respected

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© Reuters. FILE PHOTO: Chief Secretary of the Treasury Stephen Barclay is seen outside Downing Street in London

LONDON (Reuters) – A Brexit trade deal is in both sides interests but can only happen if the European Union respects British sovereignty over fisheries, UK junior finance minister Stephen Barclay said on Friday.

Asked if there would be a deal, Barclay said: “I hope so.”

“But that deal needs to reflect that fact that we’re leaving the EU, we will regain control of our fisheries – it was a key issue for many of your viewers during the Brexit debate and it is important that the deal reflects that,” he told Sky News.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Dollar Up, Ending Tough Week, Investors Digest Trump-Biden Debate By Investing.com

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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia, ending a tough week as it saw losses against the euro and its largest weekly drop against the yen in a month. U.S. President Donald Trump and Joe Biden participated in a restrained final presidential debate before the Nov. 3 presidential election earlier in the day.

The that tracks the greenback against a basket of other currencies inched up 0.08% to 93.043 by 1:02 PM ET (5:02 AM GMT). Although the dollar remained above Wednesday’s seven-week low, it was down 0.7% for the week and remained in the bottom half of a months-long range.

Trump adopted was more restrained that during the first presidential debate on Sep. 29, where he constantly interrupted both Biden and moderator Chris Wallace.

Bookmaker Ladbrokes (LON:) tweeted that betting markets showed a small movement in Trump’s favor in the immediate aftermath of the debate. However, some investors expected caution and no big moves ahead of the election.

“People are just closing out longs ahead of the election just in case Biden isn’t [elected] … we’re coming into that eye of the storm now where it takes a bit of a brave soul to put on new positions ahead of the election,” Pepperstone head of research Chris Weston told Reuters.

The pair edged down 0.11% to 104.70. The yen saw its highest weekly rise since mid-September, reversing some overnight losses after House of Representatives Speaker Nancy Pelosi expressed optimism about a consensus on the latest stimulus measures. Investors also turned to the safe-have yen over the anticipated turbulent trade ahead of the election.

The pair inched down 0.04% to 0.7112. Across the Tasman Sea, the pair inched down 0.10% to 0.6667. New Zealand released a weaker-than expected consumer price index earlier in the day, which and in the third quarter.

The pair inched up 0.02% to 6.6835. The yuan had held onto gains against the greenback as Wang Chunying, spokeswoman for China’s State Administration of Foreign Exchange (SAFE), told a news conference that the yuan has been more stable than expected.

Wang’s comments suggested that Chinese authorities are not too worried about the yuan’s recent rise and helped the yuan’s onshore trade to soar up to about half a percent shy of the 27-month peak it saw on Wednesday.

The pair edged down 0.15% to 1.3062. The pound saw losses on Thursday over the Brexit uncertainty, with investors monitoring the intensified talks between the U.K. and European Union, started on Thursday as a last-ditch effort to reach a deal.

The U.K. and Europe will release Purchasing Managers’ Index (PMI) figures due later in the day, with investors gauging the economic damage as the region battles a second wave of COVID-19 cases. The U.S. will also release its PMI figures later in the day.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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