GBP/USD worth, information and evaluation:
- GBP/USD is weakening forward of tomorrow’s financial coverage choice by the US Federal Reserve and Thursday’s coverage announcement by the Financial institution of England.
- The Federal Open Market Committee is anticipated to resolve to wind down its bond-buying program however opinions are divided over whether or not the Financial institution of England will enhance UK rates of interest or depart them the place they’re.
GBP/USD trending decrease near-term
GBP/USD is trying weak forward of this week’s central financial institution conferences within the US and the UK, and it’s exhausting to see any near-term upside for the pair provided that the markets are totally pricing in a UK fee enhance of 15 foundation factors to 0.25% so the chance is that the Financial institution of England’s financial coverage committee will resolve to depart charges unchanged, sending GBP/USD down additional. In contrast, it’s not clear how there might be a hawkish shock from the BoE.
As for the US, it will be a shock if the Federal Reserve didn’t ship a tapering of its financial stimulus program however USD will possible nonetheless profit on the expense of currencies like GBP.
GBP/USD Worth Chart, Each day Timeframe (April 13 – November 2, 2021)
Supply: IG (You possibly can click on on it for a bigger picture)
Financial institution of England to boost charges?
Whereas the markets have largely priced in a UK fee enhance, economists aren’t so positive. In polls by the Reuters and Bloomberg information companies, analysts requested for his or her opinions have been roughly break up equally between these anticipating a fee rise and people predicting no change. It is usually not clear whether or not voters on the MPC shall be unanimous of their verdict, which appears unlikely and might be an extra drag on GBP.
Glimmer of hope for GBP
On the brilliant aspect for GBP, France appears to have backed away from a full-scale confrontation with the UK over fishing rights. This was by no means anticipated to be a significant factor within the markets however continues to be reasonably supportive for Sterling. Nonetheless, IG consumer positioning knowledge again the argument for a weaker Pound.
The retail dealer knowledge for GBP/USD present 56.14% of merchants are net-long, with the ratio of merchants lengthy to quick at 1.28 to 1. The variety of merchants net-long is 6.90% greater than yesterday and 19.41% greater than final week, whereas the variety of merchants net-short is 5.57% greater than yesterday and 14.52% decrease than final week.
Right here at DailyFX, we sometimes take a contrarian view to crowd sentiment, and the very fact merchants are net-long suggests GBP/USD costs might proceed to fall.Merchants are additional net-long than yesterday and final week, and the mixture of present sentiment and up to date modifications provides us a stronger GBP/USD-bearish contrarian buying and selling bias.
— Written by Martin Essex, Analyst
Be at liberty to contact me on Twitter @MartinSEssex