GBP/USD NEWS (POUND US DOLLAR)


GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

Latest GBPUSD News


Technical Overview

Looking at the technical picture, the pair stalled its recent positive momentum near a resistance marked by 38.2% Fibonacci level of the 1.3515-1.2905 recent pullback. However, the fact that the pair has already confirmed a near-term break through a descending triangle, the near-term technical set-up seems tilted in favour of bullish traders. A sustained move beyond the weekly swing highs, around mid-1.3100s, will reaffirm the constructive outlook and set the stage for a move back towards reclaiming the 1.3200 round-figure mark. The momentum could further get extended towards mid-1.3200s and late December/early January swing high resistance near the 1.3285 region.

On the flip side, any pullback might continue to attract some dip-buying near the 1.3100 round-figure mark, which coincides with 200-period SMA on the 4-hourly chart and should help limit the downside. The triangle resistance breakpoint, currently near the 1.3070-65 region, now seems to act as strong support, which if broken might prompt some near-term weakness. The pair then might turn vulnerable to accelerate the slide back towards challenging the key 1.30 psychological mark with some intermediate support near mid-1.3000s (23.6% Fibo. level).


Fundamental Overview

The GBP/USD pair edged lower on Thursday and eroded a part of the previous session's goodish positive move to two-week tops. As investors assessed the possibility of a BoE rate cut at its upcoming meeting on January 30, a modest pickup in the US dollar demand prompted some long-unwinding trade on Thursday. Concerns over China's coronavirus outbreak turned out to be one of the key factors that benefitted the greenback's perceived safe-haven status against its British pound.

Apart from a modest USD uptick, the pullback lacked any obvious fundamental catalyst and thus, lacked any strong follow-through. The pair quickly reversed an intraday dip to sub-1.3100 levels, albeit ended the day with modest losses and snapped three consecutive days of winning streak. The pair held steady above the mentioned handle through the Asian session on Friday. Heading into next week's BoE policy decision, the flash version of the UK Manufacturing and Services PMI prints for January will play a key role in influencing the pair's momentum on the last trading day of the week.



Big Picture

THEMES AFFECTING THE GBP/USD

SPECIAL GBPUSD YEARLY FORECAST

GBP/USD Price Forecast 2020: Pound may continue to fall on hard Brexit deadline

The GBP/USD pair gained some positive traction during the early part of 2019 but then recorded some heavy losses over the subsequent six months and dropped to levels below the key 1.20 psychological mark in early September. The pair then rallied nearly 12%, hitting its highest level since May 2018 during the latter half of December in reaction to a landslide victory for the incumbent Conservative Party in the most important UK Parliamentary elections on December 12. The outcome is expected to break the longstanding gridlock and provide a clear path for ratification of the Withdrawal Agreement before the January 31, 2020 deadline.

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Latest GBPUSD Analysis


Latest GBPUSD Analysis

Editors' picks

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EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.

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GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

GBP/USD News

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Majors

Cryptocurrencies

Signatures


Influential Institutions & People for the GBP/USD

The Pound VS Dollar can be seriously affected by news or the decisions taken by two main central banks:

The Bank of England is the central bank of the United Kingdom. Established in 1694 and privately owned in the beginning, the Bank was nationalised in 1946 so now is completely owned by the UK government. BOE's main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable. The bank is overseen by the Court, named used to reffer the board of directors, and is accountable to Parliament and the public.

On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.


Mark Carney

Mark Carney is Governor of the Bank of England and Chairman of the Monetary Policy Committee, Financial Policy Committee and the Board of the Prudential Regulation Authority. He joined the Bank on 1 July 2013. Carney was born in Canada in 1965 and graduated from Harvard with a bachelor's degree in Economics in 1988. In Oxford University, he also received a master’s degree and a doctorate both in Ecobomics in 1993 and 1995 respectively. Before becoming the Governor of the BOE, he worked as a Governor of the Bank of Canada (BOC) from February 1st. 2008 until June 3rd. 2013.

Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

BOE NEWS & ANALYSIS

ECB NEWS & ANALYSIS


About GBP/USD

The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. The pair is also called 'The Cable', referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term originated in the mid-19th century, which makes it one of the oldest currency pairs.

Pound Dollar represents two economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, this pair has been suffering some turbulence due to risk related with the abandonment process from the European Union.

Related pairs

EUR/USD

The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity of Euro Dollar is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.

Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.

USD/JPY

The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.

Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when referred to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is due to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.