GBP/USD Forecast

  The GBP/USD pair rose rapidly on Wednesday as it was suggested by Ben Bernanke that possible quantitative easing is in the cards in front of Congress. Because of this, the USD sold off against almost everything in the markets. With this latest move, it gives the Pound a bit of a reprieve for the moment. However, as risk gets shunned on the next shock to the markets, we would still expect this pair to fall. Because of this, we are looking at this move as a possible signal to start looking for rallies to sell at higher levels.

The GBP/USD managed to move higher on Wednesday despite the weak data from the United Kingdom as the sterling took advantage of the weak dollar and eased global growth fears which offset the focus from the data and the lingering debt crisis. The jobs report from the United Kingdom was not at all supportive for the pound’s rally which reported higher than expected jobless claims in June by 25.5 thousand which assured the broadening economic softness. Nevertheless, the market was focused on the upbeat GDP from China and hints from Bernanke that the Fed is ready to act if the economy continues to weaken with more stimulus measures, which also helped support eased growth fears and offset the focus from Europe. On Thursday, the relief rally was to excessive as we expect and no concrete fundamentals or changes in the debt crisis or in growth have taken place to support the strong unwinding and sterling as we see remains weak and only responding...

The USD/CHF pair fell on Tuesday, but remains stuck in the recent consolidation range between 0.85 and 0.83. The pair looks weak, and has been in a downtrend for years, but a sell at this level could see you waiting out a potential breakdown of the bottom of this box. (This could be a long time – you never know.) Because of this, we are looking for a close on the daily chart below the 0.83 level to sell.

GBP/USD fell hard on Tuesday, but bounced to form a hammer just above the all-important 1.59 level. The candle shows how hard it is going to be to break the level, and days like this is why we have mentioned more than once we want to see a close of the day below 1.59 – this kind of action can get you into trouble. The pair looks like a bounce is likely, but this should only provide a higher level from which to sell.

Forex Technical Update Prev: GBP/USD in a Wedge Breakout Signaling Bearish Continuation (7/6) GBP/USD - After breaking below a rising wedge last week, the sterling-greenback has been bearish. - The bearish attempt stretched the current swing to below 1.58, completing a swing projection by 1.5850, breaking below the 1.5880 61.8% retracement support. - This completes a wave equality seen in the daily chart, and what is known as a Gartley retracement pattern. At the completion, bullish intention can be expected. - If the US session closes GBP/USD below 1.58, the bearish a target of 1.5666 (78.6% retracement) is in sight. - However, it should also be noted that the RSI has failed to break below 30, and therefore never established bearish momentum. - Also price action shows some initial rejection from going lower than the 61.8% retracement level. If we close the US session above 1.5880, we might be able to expect some further bullish attempt in the middle of this week back towards 1.60. - Going down...

The GBP/USD remained pressured by the prevailing pessimism in the market on Tuesday with risk aversion and dollar strength more effective than the UK data that was mainly mixed. The trade deficit widened unexpectedly in May which is surely downbeat on the fragile economy that relied on exports to expand in the first quarter with the weak domestic front. Yet on a pleasant note, inflation finally eased falling to 4.2% in June from 4.5% which still was not strong enough to offset the negativity on sterling from the wide market selloff and downside pressure with the worsening debt crisis and growth outlook. The drop in inflation is very good for policy makers considering the economic status with high inflation and faltering growth, which is restricting them from taking any monetary action, and now if inflation indeed slows at least they can take a decision to support growth shall it slow further. On Wednesday the data from UK is to be the focus for...

Coming Up Today (all times GMT) GBP CPI (8:30) CAD Trade Balance (12:30) USD Trade Balance (12:30) USD FOMC Minutes (18:00)   Worries have morphed into panic, or as they say the “sh@$ is hitting the fan” as Forex traders have begun to look beyond Greece and are setting their eyes on Italy. While Italy is in no immediate danger of defaulting on its debt payments for at least two years, Italy’s banks may need to raise fresh capital to shore up their damaged balance sheets. If troubled banks are unable to sell assets or new debt to work out their own problems, the Italian government could be forced to take over and inject Euro’s to stave off insolvency. A similar situation has and continues to occur for Irish banks. Due to the size of the necessary funding Ireland has turned to the ECB for funding. As such, the worry is that such payouts of the ECB to shore up Italy’s banks would dwarf the bailouts of...

  The USD/CHF pair fell on Monday but managed to form a hammer at the end of the session. The pair is currently stuck in consolidation between 0.8250 and 0.8550, and looks to remain so as there is a fight between which one of these safe haven currencies that traders want to own as the markets had a rough day in general on Monday.

  The GBP/USD pair fell on Monday, and even pierced below the 1.59 level we have been watching. However, it looks as if we may close slightly above that area. If we can get a close below 1.59 – that might be our long-term sell signal. However, it should be noted that there can and will be several bumps in the road along the way.

The GBP/USD started the week on Monday with heavy losses as the bearishness dominated the pair’s movement on risk aversion which powered the dollar and intensified the weakness for sterling. The royal currency is already hammered by its own weakness, from the faltering recovery and the rise in inflation which continues to worsen the outlook for the economy with the inability of policy makers to take action. We can also see that the deepening debt crisis has more downside pressures on Ireland with the contagion risk rising and the high exposure for UK banks to Ireland debt in particular and also to Spanish debt which if the crisis worsened will eventually affect the financial stability in the kingdom deeply and might drive the nation back into recession. The weak data expected this week start on Tuesday with the focus on rising inflation amid the faltering recovery which will keep the downside pressure evident on sterling. Slight upside relief might be expected if...