Sterling Week Ahead Technical Analysis – GBPUSD, EURGBP & GBPNZD
Sterling (GBP) Technical Analysis
- GBPUSD – US dollar strength puts pressure on 1.3000.
- EURGBP – Stuck in a range.
- GBPNZD – Moving higher on Kiwi dollar weakness.
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Technical Forecast for Sterling (GBP): Neutral
I remain neutral on Sterling overall for the week ahead but there are other forces in-play which makes choosing the right pair more important than overall Sterling direction. Brexit also comes back into play next week, as MPs return from their Easter break, so expect trading ranges and volatility to ramp up from the current lowly levels.
GBPUSD is trying to stay above 1.3000 but is finding it increasingly difficult in the face of a resurgent US dollar. The 1.3000 line in the sand has effectively held for the last few weeks as markets price-in a soft Brexit. The descending wedge pattern off the March 13 high at 1.3380 continues to hold sway with the floor around 1.2960 the first real level of support if 1.3000 breaks. This level also cuts across the 200-day moving average, adding credibility and support. A break and close below here opens the way to 23.6% Fibonacci retracement at 1.2894. The CCI indicator at the bottom of the chart indicates the pair may be oversold in the short-term but US dollar strength is likely to drive price-action in the short-term.
GBPUSD Daily Price Chart – April 18, 2019
How Central Banks Impact the Forex Market
EURGBP has edged higher over the past week but is now turning as the Euro comes under selling pressure on heightened fears that the Euro-Zone growth is slowing down further. The 23.6% Fibonacci retracement level at 0.8621 is now acting as support while the next Fibonacci level at 0.8718 is likely to act as strong resistance. The CCI indicator is just turning out of overbought territory which may then bring into play the 0.8600 – 0.8610 area where the 20- and 50-day moving averages currently sit. Again, the pairs next move will be driven by Brexit-related headlines.
EURGBP Daily Price Chart – April 18, 2019
Interest Rates and the Foreign Exchange Market
GBPNZD is currently moving higher and respecting the 200-day moving average as the Kiwi dollar weakens. The pair made a fresh five-month spike high on Tuesday but faded back into its two -week trading range. GBPNZD also now trades above its 20- and 50-day moving averages, which should provide initial support in the event of a downturn before the 200-day ma at 1.9260 comes into play. To the upside, a break back above this week’s high leaves 61.8% Fibonacci retracement at 1.9582 the first target. Further Kiwi dollar weakness could then see GBPNZD attempt 2.0000 in the medium-term with short-term upside slowed by an overbought signal from the CCI indicator.
GBPNZD Daily Price Chart – April 18, 2019
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