JeffKip
Short

GBPUSD Short on account of Dovish Bank of England

FX_IDC:GBPUSD   POUND STERLING / US DOLLAR
Technical Analysis:
  • Technicals are on the chart, the Fibonacci Retracement , S/R Levels and Measures of Trend.
  • The pair is trading below the 200 Day MA and the Long Term Pivot at 1.56600. Typically, short positions are sought with this in mind.
  • If today's daily candle close is bearish , then the candlestick formation becomes an Evening Star at 52400 Resistance.

Fundamentals and Market Conditions:
GBP:
  • Last week's dovish turn from the BoE makes sense in light of upcoming headwinds facing the UK.
  • First, significant front-loaded fiscal consolidation is likely to weigh on growth.
  • Second, the Brexit debate will heat up soon and potentially deter foreign portfolio and direct investment flows into the country.
  • This is particularly problematic given the UK's large current account deficit.
  • Finally, underlying sources of labour market health, such as hours worked and weekly earnings , are turning.
  • The main risk to this trade is a resurgence in UK economic data.

USD:
  • Regardless of last week's downtick in economic data, King Dollar has held strong, resorting to a range rather than a severe correction in the majors.
  • The Fed is currently more hawkish than the BoE and as we all know Central Banks and their Fiscal/Monetary Policy are King when it comes to driving currencies.
  • Federal Funds Futures currently imply a 70% probability of a rate hike in December. See here.
Comment: Trade is in the Red after last night's FOMC Minutes release though don't think it'll get past the 200 SMA though.
Comment: Friday D1 TFclosing with an excellent Bearish Engulfing Candle.
1.5300 proved to be formidable resistance this week.
Comment: Back in the green.
Comment: #GBP bears smelling blood? #BoE's Carney re-iterates UK will likely remain in low interest rate environment for some time.
Comment: Target 1 at 1.500 hit.
Half the position closed and profits booked and Stop Loss amount reduced by half.
Comment: SL at BE.
Trade closed: stop reached: Meh. Half the position moved back to hit stop loss at BE.
Win - Win either way.
Happy about this one.
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