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Foreign exchange markets continue to be characterised by low volatility, says Saxo Bank's John Hardy, but GBP is approaching an interesting inflection point at 0.90 versus EUR. Meanwhile, industrial metals are lower following a cautious speech by Chinese president Xi Jinping.
Short term
Trade view / 23 September 2016 at 3:37 GMT

GBPUSD: Anticipating the next upswing

Managing Director / Technical Research Limited
New Zealand
Instrument: GBPUSD
Price target:
Market price:
Background

GBPUSD popped its head above 1.31 temporarily after a Bank of England Monetary Policy Committee member suggested the UK economy had weathered the Brexit storm better than expected.

It was suggested that further easing may not be required, especially as the sterling depreciation meant the BoE’s inflation target would be met sooner rather than later.

A weaker USD also gave support to GBPUSD as traders concluded there is little chance of any action by the Fed until December, at the earliest.

Based on Fed Funds futures, the probability of 25 basis point rate hike in December is a touch over 50% and a 6% chance of a 50 point hike. 
 
There is no economic data or note due out of the UK or US today so positioning will drive momentum. However traders may latch onto the market manufacturing PMI number for the US if it misses the expected 52 by a margin.

Management and risk description

Sterling has tested and held the 10-Week Triangle support this week (refer daily chart below) and is probably now in the midst of an Elliott Wave recovery toward mathematical resistance at 1.3310/1.3350 (see daily chart) beyond this extends toward classical chart resistance just below the mid 1.3400’s.

Parameters

Entry: GBPUSD is seen as a buy today at 1.3040/1.3015.

Stop:
1.2978, initially.

Target:
1.3338.

Time horizon:
At least several days.

GBPUSD daily chart (click to expand)
GBPUSD daily chart
Source: ThomsonReuters  

GBPUSD weekly chart (click to expand)
GBPUSD weekly chart
 Source: ThomsonReuters  

— Edited by Adam Courtenay

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Non-independent investment research disclaimer applies. Read more
1y
Michael Liu Michael Liu
Hi Max, do you still hold this position?
1y
Gennady Gennady
let's perhaps rise to 1.3060
1y
Charles Asmar Charles Asmar
Going down... Alan
1y
Mekong Mekong
Just read something about short cable was the trade of the day...
1y
AlexF AlexF
In deed got lucky my saxoselect took a position yesterday 124 pips so far
1y
mzarimi mzarimi
Hit SL
1y
Charles Asmar Charles Asmar
Have a position Long GBPUSD @ 1.29606
1y
AlexF AlexF
Future on NYSE are down, may be an risk off day and thus GBPUSD continue down
1y
Mekong Mekong
Really, the trade of the day...
1y
ray444555 ray444555
Max are you still Bullish after Cable dropped on Friday.
1y
Max McKegg Max McKegg
Latest Analysis below
1y
Max McKegg Max McKegg
My Latest Analysis below
1y
varunous varunous
Any updates and targets?
1y
Max McKegg Max McKegg
Latest Analysis attached
1y
varunous varunous
Hi Max,

Thanx for the chart, I see the arrow upward but Do you have any target in mind?
1y
ray444555 ray444555
It seems the analysis has gone out of the window. Maybe it's Ms Mays brexit speech for next March that has made the GBP Fall before opening
1y
varunous varunous
whats the update now max..... any new anylysis. I still feel GBP is quite undervalued and its gonna keep on churning good economic numbers. Lets see how long can market ignore all the positive economic data from UK.
1y
Max McKegg Max McKegg
Classical Triangle completed. Resistance now 1.2890, 1.2940 max. for 1.2730 S/T Target

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