ridethepig | GBP Market Commentary 2020.01.14

FOREXCOM:GBPUSD   British Pound / U.S. Dollar
The power to breakdown has been developed knowingly and systematically, unlike chop/consolidation which frequently occurs. The effect of the breakdown is heightened by BOE turning very dovish and calling up for Sterling devaluation, which in their eyes must be required for offsetting the loss in UK market access.

Compare the following two diagrams:

Sellers step in on the election day as expected with a strong barrier.

A sweep of the highs. Can sellers maintain the breakdown?

In the first, the test of 1.35 sent buyers wandering on grounds of an orderly Brexit, depriving sellers valuable resistance. However, it was dangerous for buyers to carry on because the eye of Brexit is on it. After a Johnson majority came the selloff and now the attempt by sellers to reinstate the strategic breakdown which was previously broken is powerfully gaining momentum from the monetary side.

Should we get the breakdown, the move will be fast as the insurance cut from BOE will not last beyond May. Bailey starts in May, it will take some time for the Johnson/Javid fiscal taps to work its way into the MPC forecasts meaning another late 2020 cut is then on the cards (not in play with this chart as will unlock 1.15).

To put simply, a dovish BOE and hard Brexit will keep rates in the lower bound and QE infinity will return in 2021. For the immediate term, market clearly caught on the wrong side; 1.290x is next followed by 1.277x. Very difficult to get constructive on UK markets with BOE turning dovish.

On the EURGBP side:

Good luck all those on the sell side in Cable and other Sterling crosses, a lot of meat left on the bone. As usual thanks so much for keeping your support coming with likes, comments and etc.

Comment: Tracking the break closely.
Trade closed: target reached


Because of your subjectivity, you lose the chance of GBPUSD to do long
https://www.tradingview.com/x/uKTPow0B/I've seen your idea. Your idea is very good. I've paid attention to you. But you've always been strong that EURUSD is bullish and the dollar index is bearish. So why is GBPUSD also bearish? Too subjective! According to the proportion of US dollar index, GBP also has a proportion! I hope you don't make mistakes in the analysis of GBP because you are too subjective
ridethepig ioricool
Well @ioricool remember that Brexit is mostly an isolated case; UK self-inflicted economic bondage from the short-term loss in market share means GBP has to be artificially devalue via very dovish BOE to offset the affect on the currency. On the technical side, the damage will only be done with a breakdown, till then there is nothing to see or update as we are in no-mans land inside the 1.30xx-1.33xx range as your chart shows.
ioricool ridethepig
@ridethepig, I understand, but there is another problem. If EURUSD is bullish and long-term is bullish according to your analysis, GBPUSD is also hard to fall. Unless EURUSD needs to continue to shake? Or limited by resistance, DXY 97 price I think is the key support. So far I think USDCHF is very good
You don't think it's going to bounce to the upside off this resistance?
ridethepig AlexanderSlezewski
@AlexanderSlezewski :) your scenario is playing out so far... all it will take is a break of the 1.296x and the damage will have been done, but till then there is nothing to see or update.
Thanks for your recommendation You have a total different approach I like the way you explain the trends You say what you have to say and that's it nothing more nothing less Keep up the good work Thanks buddy
ridethepig DanielLubbe
Thanks @DanielLubbe for the nice comment
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