Hi traders,
Here's a comprehensive analysis of the GBPUSD pair, which could be worth watching this week. I'll keep the description short and in bullet points:
1) NEWS NARRATIVE
The pound came under selling pressure the previous week after the UK announced there's not much progress in trade talks with the EU. Time is passing by, and trade talks will likely continue to be a headwind for the GBP.
2) FLOWS
Market positioning remained quite bearish on the pound. Open interest rose by 2073, and all trader categories are bearish except for leveraged money. Commercials and dealers increased their short bets significantly.
According to our CommaFX ranking system, positioning in the US dollar is the most bullish among major currencies. Positioning in the USD index also remained quite bullish.
3) ECONOMIC SURPRISES
GBP: 6 out of 10
USD: 4 out of 10
Economic surprises proved to be relatively more supportive of the GBP than the USD. However, the difference is small and labor market statistics were above forecasts in the US.
4) CORRELATIONS
The gap between GBP/USD and 2y yield differentials is narrowing, but still bearish. The same applies to Brent crude. Overall, the correlation picture looks bearish for the pair.
5) TECHNICALS
The GBPUSD pair triggered a massive head and shoulders pattern on the daily chart (upper left), after previously respecting the 61.8% Fib level. The price fell below a major support level on Friday, signaling further weakness.
The pair opened with a gap to the downside, providing a selling opportunity in case of a pullback to the 1.2150 resistance.
Like our analysis? Hit the "LIKE" button and let's start a discussion on the trade idea in the comment section below. Thanks!
Here's a comprehensive analysis of the GBPUSD pair, which could be worth watching this week. I'll keep the description short and in bullet points:
1) NEWS NARRATIVE
The pound came under selling pressure the previous week after the UK announced there's not much progress in trade talks with the EU. Time is passing by, and trade talks will likely continue to be a headwind for the GBP.
2) FLOWS
Market positioning remained quite bearish on the pound. Open interest rose by 2073, and all trader categories are bearish except for leveraged money. Commercials and dealers increased their short bets significantly.
According to our CommaFX ranking system, positioning in the US dollar is the most bullish among major currencies. Positioning in the USD index also remained quite bullish.
3) ECONOMIC SURPRISES
GBP: 6 out of 10
USD: 4 out of 10
Economic surprises proved to be relatively more supportive of the GBP than the USD. However, the difference is small and labor market statistics were above forecasts in the US.
4) CORRELATIONS
The gap between GBP/USD and 2y yield differentials is narrowing, but still bearish. The same applies to Brent crude. Overall, the correlation picture looks bearish for the pair.
5) TECHNICALS
The GBPUSD pair triggered a massive head and shoulders pattern on the daily chart (upper left), after previously respecting the 61.8% Fib level. The price fell below a major support level on Friday, signaling further weakness.
The pair opened with a gap to the downside, providing a selling opportunity in case of a pullback to the 1.2150 resistance.
Like our analysis? Hit the "LIKE" button and let's start a discussion on the trade idea in the comment section below. Thanks!
