GBPUSD 1.20 Target Achieved, New Pattern Emerging
Technical & Trade View
GBUSD
Trade View
1.20 Target Achieved, New Pattern Emerging
Bias: Bullish Above Bearish below 1.1760
Technicals
Primary support is 1.1760
Primary upside objective 1.2060
Next pattern confirmation, acceptance above 1.1970
Failure below 1.1730 opens a test of 1.1630
20 Day VWAP bullish, 5 Day VWAP bullish
Today’s New York Cut Option Expiries: 1.1695-00 (414M), 1.1800 (319M)
Institutional Insights
According to analysts at Credit Agricole ‘The GBP could remain an attractive stagflation and risk aversion hedge for now. Soaring energy costs, labour market shortages, global supply chain disruptions and persistent Brexit-related headwinds continue to plague the UK economic recovery and thus complicate the BoE’s ability to normalise in the face of uncomfortably high inflation. This could keep UK real rates and yields negative and weigh on the GBP for now. In addition, the war in Ukraine as well as idiosyncratic risks related to Brexit could make the UK’s economic recovery less robust as well. In the longer term, recovering UK real rates and yields could usher in a cautious recovery for the GBP in H223’
According to analysts at Scotia Bank ‘IMM data for the week through Tuesday reflect a further moderation in USD bullish sentiment. Overall USD long positioning has been steadily pared back in the past few weeks but plunged sharply in last week’s data and eased further ahead of last week’s US CPI report. The aggregate USD long fell just under USD1bn this week and now stands at just USD1.2bn, effectively neutral, and reflects the least bullish sentiment on the USD among Non-Commercial (speculative) accounts overall since early 2021. Investors turned less bearish on the GBP apart from the USD351mn short-covering in the GBP, positioning changes were relatively minor’
GBUSD
Trade View
1.20 Target Achieved, New Pattern Emerging
Bias: Bullish Above Bearish below 1.1760
Technicals
Primary support is 1.1760
Primary upside objective 1.2060
Next pattern confirmation, acceptance above 1.1970
Failure below 1.1730 opens a test of 1.1630
20 Day VWAP bullish, 5 Day VWAP bullish
Today’s New York Cut Option Expiries: 1.1695-00 (414M), 1.1800 (319M)
Institutional Insights
According to analysts at Credit Agricole ‘The GBP could remain an attractive stagflation and risk aversion hedge for now. Soaring energy costs, labour market shortages, global supply chain disruptions and persistent Brexit-related headwinds continue to plague the UK economic recovery and thus complicate the BoE’s ability to normalise in the face of uncomfortably high inflation. This could keep UK real rates and yields negative and weigh on the GBP for now. In addition, the war in Ukraine as well as idiosyncratic risks related to Brexit could make the UK’s economic recovery less robust as well. In the longer term, recovering UK real rates and yields could usher in a cautious recovery for the GBP in H223’
According to analysts at Scotia Bank ‘IMM data for the week through Tuesday reflect a further moderation in USD bullish sentiment. Overall USD long positioning has been steadily pared back in the past few weeks but plunged sharply in last week’s data and eased further ahead of last week’s US CPI report. The aggregate USD long fell just under USD1bn this week and now stands at just USD1.2bn, effectively neutral, and reflects the least bullish sentiment on the USD among Non-Commercial (speculative) accounts overall since early 2021. Investors turned less bearish on the GBP apart from the USD351mn short-covering in the GBP, positioning changes were relatively minor’
This analysis is provided as general market commentary and does not constitute investment advice. Past performance is not indicative of future results