Throughout the second half of August the GBP/USD slowly but surely drifted lower away from the resistance level 1.57, and back down below 1.55. In the last few weeks however it has rallied well and surged higher to move back up strongly through 1.56, 1.57, 1.58 and now 1.59 to its highest level since January at 1.5950 before easing back in the last couple of days. The 1.57 level was likely to provide some resistance, but it didn’t hold up progress higher that much. A few weeks ago it fell down to a two week low near 1.54 before rallying back towards 1.5550. The week before it did well to maintain its level above the key 1.56 level and in the process moving to a new two month high above 1.57 which has now been surpassed by the present high. It immediately retreated strongly but continued to receive solid support from the 1.56 level before closing below at the end of that week. Several weeks ago it surged higher to through the resistance level at 1.56 to a then two month high around 1.5650, before spending the next few days consolidating and trading within a narrow range around 1.5650, receiving support from the key 1.56 level.
A couple of months ago the resistance level at 1.54 was proving to be quite solid, and once it broke through the pound surged higher to a new seven week high near 1.56 in a solid 48 hour period run. In the week leading up to this the pound had recovered strongly and returned to the previous resistance level at 1.54 after the week earlier undoing some of its good work and falling away sharply from the resistance level at 1.54 back down to around 1.5150 and a two week low. A few weeks ago the 1.54 resistance level stood firm and the pound fell away heavily, however the 1.51 support level proved decisive and helped the pound rally strongly.
Earlier in July after having done very little for about a week, the GBP/USD started to move and surge higher and move through the 1.52 and 1.53 levels to the one month high above 1.54. Prior to the move higher, it moved very little as it found solid support at 1.51 and traded within a narrow range above this level. It established a trading range in between 1.51 and 1.52 after it took a breather from its excitement just prior when it experienced a strong surge higher moving back to within reach of the 1.52 level from below 1.49, all in 24 hours. About a month ago it did well to climb off the canvas and move back above 1.49 and towards 1.50 again before seeing the pound reverse and head back down below 1.49 to reach a new multi-year low near 1.48. It experienced sharp falls moving from 1.53 down to the key long term level of 1.50 and then through 1.49. That movement saw it resume its already well established medium term down trend from the second half of June and move it to a four month low.
In the UK, BOE Governor Mark Carney has tried to use forward guidance and promise anyone who listens that he will not raise interest rates for another three years. However, many investors don’t buy what Carney is selling, and believe that the BOE will raise rates by the middle of 2o15. With the UK economy continuing to pick up steam, it’s not hard to see why Carney is having a tough time convincing the business community that rates will not rise until 2o16. If the economy continues to improve, it will be interesting to see if Carney maintains his stance on interest rates.
GBP/USD September 18 at 00:20 GMT 1.5902 H: 1.5936 L: 1.5885GBP/USD Technical" title="GBP/USD Technical" src="https://d1-invdn-com.akamaized.net/content/pic32287ea69fef5b7bad56458e768593d7.png" height="82" width="600">
During the early hours of the Asian trading session on Wednesday, the GBP/USD is consolidating in a narrow range right around 1.59 after having done nothing for the last 24 hours. Since the middle of June the pound has fallen very strongly from the resistance level at 1.57 back down towards the long term key level at 1.50 and is now enjoying a solid recovery over the last month or so moving back to above 1.59 and its highest point since January.
Current range: Right at the key 1.5900 level.
Further levels in both directions:
• Below: 1.5800 and 1.5400.
• Above: 1.5950.
(Shows the ratio of long vs. short positions held for the GBP/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The GBP/USD's long position ratio has dropped sharply back under 30% as the GBP/USD has moved up above the 1.59 level. Trader sentiment remains heavily in favour of short positions.
Economic Releases
- 00:30 AU Westpac-MI Leading Index (Jul)
- 08:30 UK BoE MPC minutes
- 12:30 US Building Permits (Aug)
- 12:30 US Housing Starts (Aug)
- 18:00 US FOMC – Fed Funds Rate (Sep)
- 18:00 US Fed release summary of Economic Projections
- 18:30 US Fed Chairman Bernanke holds press conference following FOMC meeting on interest rate policy
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