GBP value, information and evaluation:
- GBP/USD has been falling steeply since Friday, largely as a result of USD energy.
- That weak spot might properly persist because the pair nears crucial assist ranges.
- The UK flash buying managers’ indexes (PMIs) for November, launched this session, got here in above economists’ expectations however had no affect on GBP.
GBP nonetheless underneath downward stress
GBP/USD will doubtless prolong the falls that started final Friday because the US Greenback continues to learn from the reselection of Jay Powell as chair of the US Federal Reserve. His reappointment is now anticipated to be a formality, and that might properly imply a quicker withdrawal of US financial stimulus and several other US rate of interest will increase subsequent 12 months.
Furthermore, the prospect of a UK rate of interest hike when the Financial institution of England’s financial coverage committee subsequent meets on December 16 continues to be absolutely priced in to the markets, that means there may be little upside for GBP/USD if that’s confirmed, and substantial draw back if it isn’t. Pricing places the probabilities of a price rise to 0.25% from the present 0.10% at 100%.
Turning to the GBP/USD chart, the primary necessary assist stage is the 1.3353 low touched on November 12, with trendline assist at 1.3280. If these break, the pair might be again at ranges not seen since December 2020. Word too that the 14-day relative energy index (RSI) on the backside of the chart under stays above the 30 oversold stage.
GBP/USD Value Chart, Every day Timeframe (September 21, 2020 – November 23, 2021)
Supply: IG (You’ll be able to click on on it for a bigger picture)
UK PMIs increased than anticipated
Within the information, the November flash PMIs for the UK all got here in above the consensus forecasts of economists polled by the information companies. The composite index was nonetheless down marginally from October however the manufacturing index really rose.
Supply: DailyFX calendar
As for sentiment, IG consumer positioning information for GBP/USD are additionally suggesting additional falls for GBP/USD. The retail dealer information present 71.66% of merchants are net-long, with the ratio of merchants lengthy to brief at 2.53 to 1. The variety of merchants net-long is 7.68% increased than yesterday however 5.28% decrease than final week, whereas the variety of merchants net-short is 0.33% decrease than yesterday and 5.67% decrease than final week.
Right here at DailyFX, we sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests GBP/USD costs could proceed to fall. Merchants are additional net-long than yesterday and final week, and the mix of present sentiment and up to date adjustments provides us a stronger GBP/USD-bearish contrarian buying and selling bias.
— Written by Martin Essex, Analyst
Be happy to contact me on Twitter @MartinSEssex