The GBP/USD has started to see volatility wane as both the Pound and the Dollar has lost favor leaving the pair in a stalemate. Flat U.K. retails sales in August sums up the current outlook for the economy which could lead to the pair remaining range bound over the near-term.
[B]Key Technical Levels[/B]
The 50-Day SMA has become the technical level to watch for the GBP/USD as it has had a gravitational pull over the past few months. We have seen extended periods of consolidation when the pair has encountered the technical level which appears to be the case with current price action. After a 30 pip decline, we have seen the sterling/dollar settle into a 100 pip range between 1.6425-1.6550.
[B]Quantitative Metrics[/B]
The ATR for the GBP/USD has steadily declined but it still remains higher than many of the other major pairs which leaves open the possibility that we will see daily volatility. A Bollinger band width of 549 pips also adds to the case against the pair as a target for scalping strategies. However, the implied volatility for it is the third lowest of the pairs listed below at 11.02 and the tight spread between the 5 and 20-day SMA’s clearly shows that the pair is in an extended period of consolidation.
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[I]To discuss this report contact John Rivera, Currency Analyst: <[email protected]>[/I]