GBP to USD forecast this week: news-driven clash of the forex titans - Capital.com
GBP to USD forecast this week: news-driven clash of the forex titans - Capital.com |
| GBP to USD forecast this week: news-driven clash of the forex titans - Capital.com Posted: 04 Mar 2020 08:34 AM PST GBP and USD: latest performance and drivers behind their price movementsThe GBP and USD have had contrasting fortunes in the lead up to the present week. The onslaught of reports from around the world on the spread of the coronavirus to at least 20 new countries panicked markets have sent traders diving into safe-haven assets. The USD has been a beneficiary of the situation and has proven to be the second-best performing safe-haven asset in the previous week, second only to the Swiss Franc. In contrast, the British Pound went into selloff mode; first from very frosty headlines around the trade negotiations which commenced this week, and then from the underwhelming economic data which had at some point, even prompted bets that a rate cut would be performed by the Bank of England. Then the coronavirus headlines took over, and the GBP suddenly found itself under undue pressure from different fronts. A look at the GBP/USD charts from last week would show that the pair was down 1.16 per cent in total, prompting a negative pound to dollar forecast this week. There are no major news announcements from the UK this week, and the major data for March 2020 starts from the 24th, with the PMI data (manufacturing and services), consumer inflation and Bank of England rate decision/statement/voting pattern due for release from the 24th to the 26th. Therefore, the pound to dollar rate forecast for March 4 – March 23 will lean towards USD-based fundamentals, the Brexit trade negotiations and any unexpected actions from the Bank of England before its March 26 monetary policy meeting. GBP/USD price analysis: what do the price charts tell us?The monthly chart is the long-term barometer of the trend for the pair, and it indicates that the GBP/USD is in a side trend after trending downwards following 2016's Brexit referendum. This leaves the GBP/USD crying for long-term direction. The weekly chart reflects the medium-term view of the GBP/USD. The chart shows a descending channel that has encased price action from December 2020 till date. The weekly candle for last week found support at the intersection between the lower border of the channel and the lows 3 September 2018, 11 February 2019 and 11 November 2019, which form the horizontal support at 1.27780. So far, the candle for the current week has maintained that support. The GBP/USD is up 0.16 per cent for the current week, as the Fed's interest rate decision triggered slight USD weakness across several pairs.
The daily chart shows the price action within the channel, displaying the price waves seen in a channel, as price trades from one boundary to another. We can see that the RSI indicator still has some room for the downside move towards the oversold levels, which could signal further weakness ahead.
The GBP is still quite weak relative to the USD. The ADP Employment Change, ISM Non-manufacturing PMI and Non-farm payrolls data will determine whether there is enough weakness in the USD to prompt a GBP/USD price recovery, which could target the upper boundary of the channel or possibly break above it. If this is the case, then upside targets reside at 1.30283 (short-term) and 1.34429 (medium-term). If the USD acquires enough strength to cause the pair to break below the channel, then downside targets at 1.26607 and 1.24964 could offer support to such price moves. Trade British Pound / US Dollar CFDGBP to USD forecast this weekThe week began with positive expectations that the emergency G7 meeting would come out with positive recommendations for coordinated action against the coronavirus, followed by coordinated central bank response. However, the statement following the meeting did not address this point. The GBP to USD forecast this week was turned on its head on Tuesday when the Federal Reserve held an unannounced emergency meeting and cut the interest rates by 50bps to 1.25 per cent a few minutes after the G7 statement was issued. The Fed was not scheduled to meet until March 16-17, so the move caught traders by surprise. However, the market response on many USD-denominated currency pairs was surprisingly muted, meaning that markets want much more than just interest rate cuts to stave off a global coronavirus-induced recession. As mentioned earlier, the direction of the GBP/USD rate forecast this week will depend on the outcomes of the three high-impact economic data which will hit the markets from Wednesday, March 4, to Friday, March 6. Only then an accurate prediction can be given. If the data are deemed USD-positive, then the GBP/USD pair is expected to lose strength for the rest of the week. However, weak US data could allow the pair to recover. Regardless, the situation now remains highly dynamic. With the markets expecting some form of action from the major central banks, surprises along this line from the BoE cannot be ruled out. Therefore, the best approach would be to ensure that a live news feed is available to provide the news as it happens and to trade off whatever information is available on the charts. Always stay on top of the latest market developments with Capital.com. Read more: Pound to dollar forecast 2020: what to expect from this forex major in the coming decade |
| Posted: 04 Mar 2020 07:58 PM PST The New Zealand Dollar is trading flat on Thursday amid pressure on the Reserve Bank of New Zealand (RBNZ) to cut its official cash rate after the Reserve Bank of Australia (RBA) trimmed rates on Tuesday and the U.S. Federal Reserve – in an emergency measure not used since the Global Financial Crisis – cut it fed funds rate by half a percentage point in response to the coronavirus outbreak. At 03:38 GMT, the NZD/USD is trading .6297, down 0.0009 or -0.01%. On Tuesday, the RBA cut its official interest rate by a quarter of a percentage point to 0.5 percent, saying the coronavirus outbreak was having a significant effect on the economy. The Fed made its cut despite a strong economy, saying, "However the coronavirus poses evolving risks to economic activity." It said. Reserve Bank Governor Adrian Orr is set to deliver the next review of the official cash rate (OCR) on March 25.  Daily NZD/USD Daily Technical AnalysisThe main trend is down according to the daily swing chart. A trade through .6192 will signal a resumption of the downtrend. The main trend will change to up on a move through .6488. This is highly unlikely but there is room for a 50% to 61.8% retracement of the last break. A trade through .6335 will change the minor trend to up. This will also shift momentum to the upside. On the downside, support is a series of former bottoms at .6204, .6194 and .6151. The short-term range is .6488 to .6192. Its retracement zone at .6340 to .6375 is the primary upside target. The minor range is .6335 to .6192. Its 50% level or pivot at .6263 is controlling the short-term direction of the NZD/USD. Daily Technical ForecastBased on the early price action and the current price at .6297, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the short-term pivot at .6263. Bullish ScenarioA sustained move over .6263 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into a pair of downtrending Gann angles at .6328 and .6339, followed closely by a 50% level at .6340. Since the main trend is down, look for sellers to arrive on a test of these levels. Taking out .6340 could trigger an acceleration to the upside with .6375 the next upside target. Bearish ScenarioA sustained move under the pivot at .6263 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor bottom and multi-year low at .6192. This article was originally posted on FX Empire More From FXEMPIRE: |
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