Liz Truss’s short stint as the UK’s Prime Minister came to end on Thursday, with her resignation following a failed economic package that took the British Pound to all-time-lows against the US Dollar.
Despite BOE intervention helping GBP/USD recover from its downside breakout when the mini-budget was first announced, the pair still remains over 2.5% lower since Truss took to office. While cable did rally yesterday in anticipation of the announcement, it ultimately pared gains to remain near the week’s lows.
However, this could put focus for the Pound bank onto the Bank of England and their rate hike path. Will the BOE remain hawkish and help GBP/USD push higher?
Check out our latest market commentary for a deeper technical analysis and key levels to keep an eye on:
GBP is not going to be a top long-term buy or sell for quite a little while. Short-term the market cannot identify whether Liz Truss’s resignation is a good thing or a bad thing. It will probably be ambivalent towards her successor as well.
I think long term GBP/USD got clearly defined top and bottom. GBP will never sink too low cos fundamentally good economy and USD will never weaken beyond a certain point cos still the main safe-haven currency as recent crises have proven.
Will be interesting to see this weeks CoT report for the GBP Futures. Last week, the institutions ‘Smart Money’ were heavily net short whereas the retailers were heavily net long. Retailers got it right, which is a good sign that the bottom is in, if a 1200 pip bounce didn’t already make that clear enough.
Retail traders are always trying to fade trends (I blame the education that they get), Institutional Traders will always follow the trend, until the bend, in the end. So when retailers beat the banks, that is a good sign of a major shift taking place.
I always follow the long-term underlying trend: private retail traders always try to fade it as you say. But GBP is too strong to be a GBP/USD shorting opportunity, while the UK government is in a state of flux, so a high risk of stupid volatility.
Most private retail traders are intelligent but ignorant.
Yes, I’d say the downtrend is still intact. But that’s just using a restrictive TA-based view and other perspectives are relevant.
Firstly the political situation is unique and unpredictable, so volatility will be high and events-driven / rumour-driven reversals more possible than usual.
Secondly, the 7 GBP charts have shown GBP has strengthened considerably, so better opportunities should be seen elsewhere.
Finally the entry signals I would have normally used off D1 charts have just not produced any great results, which tends to confirm the above.
But its all OK, I will trade something again eventually.
If you use EMA you’ll notice that GBP/USD also known as cable has increased by 50 and 200 periods at1.1283 and 1.1309 respectively. Also the RSI has moved to the bullish side. This can offer a good buy bargain for the traders and investors though I have been avoiding this pair since the end of September.
