GBP/USD at key level ahead of UK budget
Fawad Razaqzada March 8, 2017 6:50 AM
The general consensus going into today’s UK budget is that Chancellor Philip Hammond will disappoint and that the GBP/USD may extend its declines towards 1.20. He is well aware of Brexit risks and may thus predict a more turbulent economic outlook. The risk therefore is if he expresses more optimism about the economy and delivers more fiscal spending plans than expected. If that’s the case, the GBP/USD could easily rebound. It is worth pointing out that those who had sold the pair, may cover their positions now, triggering a short-squeeze or relief rally on the cable. There’s some important US economic data coming up as well, so there is even more reason why the sellers may bank profit.
Indeed, with the GBP/USD approaching lower end of its wide range, we are on the lookout for bullish signs. So far, we haven’t seen anything to suggest the cable will start its rebound. But at the time of this writing, it had drifted into a key area between 1.2140 and 1.2170. As can be see, the 1.2170 level has repeatedly held on a weekly closing basis. The 1.2140 level corresponds with the 78.6% Fibonacci retracement level. While it may end up going to 1.2000 after all, in my view the risk of a counter-trend move here is high.
Source: eSignal and FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.