The GBPUSD is ticking below the London lows/day lows as the day in the UK starts to move toward the finish. Earlier today, BOE Governor Mark Carney said interview on CNBC that:
- As some economies emerge from a period of exceptional unconventional stimulus, there will be greater volatility. That in and of itself should not influence the path of normalization of monetary policy.
- UK recovery is reasonably broad-based.
- In the UK we have to take into account a more modest global recovery
- There is persistent disinflationand some G4 economies caused by weak global demand.
Despite the relative attractiveness of the UK vs. EU fundamentals, the GBP is the weaker of the two currencies in trading today. That is reflected in the GBPUSD which is moving back toward unchanged on the day while the EURUSD is still up and trades near the highs (see prior post).
GBPUSD turns more bearish in quiet trading
Looking at the hourly chart, the pair is trading below the 100 and 200 hour MAs (blue and green lines in the chart above) and the 50% of the move up from last week (at 1.60887). This puts the sellers more in control – at least for the time being.
This week if the price is going to recover and go higher, getting back above these two moving averages is required (at 1.6097 and 1.6103). Also at the 1.6097 level is the 100 week MA (see blue line in the chart below). So there are multiple reasons for resistance against this level now. Stay below and the bears are in control. Move back above and the buyers take control (although the first attempt higher failed today)..
The move lower today – the high extended toward the highs from Friday at 1.6124 – is a bit of a disappointment for the buyers as the low from Friday bottomed nicely against the 50% of the move up from the 2013 low to the 2014 high and the 200 week moving average at the 1.6000-1.6010. This week the 200 week moving average is at 1.6013 (see chart below). Needless to say, just as the 1.61000 area is setting up as a key resistance area in trading this week, the 1.6000 area remains a key support level as well. .
Like other pairs, the GBPUSD is trading more up and down, then with trending momentum. In this type of environment, being patient and picking spots is important. If good trade entry is found, look for the next target to breach (higher or lower). The big levels will be down toward the 1.6000 level on the downside and 1.6097-03 on the topside. That is not much of a range. However, we will likely make a break at some point this week.
The price has been moving above and below the 100 and 200 week moving average for 3 weeks now.
