Jump to content

British Pound Q2 Technical Forecast: Fundamental and Technical Analysis


Recommended Posts

British Pound Q2 Technical Forecast: Can Pound Sterling Overcome Technical Hurdles?

Apr 2, 2022 |  DailyFX
Tammy Da Costa, Analyst

Pin on Trading Blogs

 

The downward trajectory of GBP/USD has continued since May last year, allowing bears to drive prices to psychological support at 1.3000 which may continue to hold sellers at bay. After failing to break below this level, GBP/USD rebounded, reaching the next zone of resistance at 1.3286, the 38.2% retracement of the 2022 move. If buyers are able to gain traction above this level, a break above 1.3400 may allow for a retest of trendline resistance, currently holding at 1.3644, which would leave the door open for a re-test of the January high at 1.3749.

GBP/USD WEEKLY CHART

British Pound Q2 Technical Forecast: Can Pound Sterling Overcome Technical Hurdles?

Source: TradingView

EUR/GBP UNDER PRESSURE AT SUPPORT

Given their large dependence on Russia for oil and gas, the ongoing war has placed the European Central Bank (ECB) in a tough position, as the pace of their monetary tightening will likely continue to lag behind that of the BoE and the Fed throughout Q2. As bulls aim to break through trendline resistance (from Jan 2021) at around 0.8400, big levels remain at the key psychological levels of 0.8600 and 0.8700 respectively.

However, if geopolitical tensions continue to rise, a break below the 2022 low at around 0.8200 could see further downward pressure accelerating the move towards the April 2016 low at 0.8110 with the next level of support holding at 0.8000.

EUR/GBP WEEKLY CHART

British Pound Q2 Technical Forecast: Can Pound Sterling Overcome Technical Hurdles?

Source: TradingView

Link to comment

GBP Forecast Q2 2022: The Bank of England's Inflation and Growth Puzzle

Apr 8, 2022 | DailyFX
Nick Cawley, Strategist

Bank of England to look through temporary inflation rise | Reuters

 

The Bank of England (BoE) is expected to raise UK interest rates further in the second quarter of 2022 as the UK central bank tries to stem soaring prices pressures. The BoE has already lifted the Bank Rate to 0.75% from 0.1% in late 2021 and money markets are currently pricing in 125 basis points of additional rate hikes this year. The latest Office for National Statistics (ONS) inflation release showed headline inflation hitting 6.2% in February, a fresh 30-year high, while core inflation rose to 5.2% from 4.4% in January. And even higher levels of inflation are expected in Q2 this year. The latest BoE monetary policy release shows that the UK central bank expect headline inflation to top 8% in the coming months, citing sky high energy and food prices as the main drivers of the move.

Please add a description for the image.

Source: TradingEconomic.com

The UK central bank recently pushed back against these market expectations, fearing that a series of hikes may stall growth in the months ahead. UK growth is now back above pre-covid levels and looks robust, despite fears that the Ukraine crisis, and Russian sanctions, will cause further supply chain disruptions. The latest BoE monetary policy report noted that while business confidence and labour market activity have remained robust, ‘consumer confidence has, however, fallen in response to the squeeze on real household disposable incomes’. It is this worry that a downturn in consumer spending will slow economic activity in the months ahead, especially with inflation expected to hit, and stay at, multi-decade highs. According to the BoE, UK GDP is now expected to be flat for Q1, compared to 1.1% in Q4 2021. The chart below shows that the central bank’s inflation expectations from the February MPC meeting are already on the low side.

Please add a description for the image.

Source: ONS and Bank Calculations

It is this inflation vs. growth conundrum that will cause Governor Bailey and the members of the Monetary Policy Committee to be flexible and yet still resolute in trying to quell inflation. If the central bank moves too hard, too quickly and causes growth to falter then fears of stagflation will hit the UK markets and Sterling. On the other hand if the BoE reacts to slowly and multi-decade high inflation becomes entrenched, then they will have too act even more aggressively to get a grip on UK price pressures. The Bank of England will need to balanced, sure footed and clear with their communications over the next few months if they are to succeed.

THE BRITISH POUND IN THE MONTHS AHEAD

Sterling has had a mixed Q1 and the outlook for the second quarter of the year is expected to continue these trends. GBP/USD slipped lower during the first three months of the year as the US dollar priced in a series of interest rate hikes during 2022 and into next year, widening the rate differential between the two currencies. Sterling rallied against the Japanese Yen, primarily due to JPY weakness, while EUR/GBP traded sideways with a slight negative bias. The British Pound also fell against the Australian dollar, as the commodity rich country benefitted from sharply higher metal and mineral prices. These, overall trends are likely to continue unless there is a major shift in the macro outlook, namely the ongoing crisis in the Ukraine.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,616
    • Total Posts
      96,995
    • Total Members
      44,181
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    dcartes8k
    Joined 05/12/23 00:29
  • Posts

    • Forex or Crypto swing trading is a trading style based on identifying swings in the market. Since these swings can take a while to develop, swing trading is most often done over the course of several days or market cycles. If visualized as surfers, traders who utilize this method are out to catch and ride big, long waves. However, in order to catch those waves, traders first need to identify major pivots in the market. What is a Pivot Point? For Crypto or forex traders, it is imperative to know what pivots are and how to spot them. Pivots are the points in the market where price changes direction, from bullish to bearish to bullish, etc. There are important points in price, and there are less important points. Swing traders will not focus on minor pivots, while scalpers will try to take advantage of every minor pivot found. How to Identify Major Pivot Points for Crypto or Forex Swing Trading Major pivot points are easier to spot. They tend to form near support and resistance levels, or they themselves create a new important level. These are points where buyers and sellers are very active. Minor pivots form more regularly and randomly. 
    • The  listing of LSK on the named CEX, with their 20M+ user base will  expose LSK to a different set of traders who prefer or actively use the trading platform esp utilizng their copy trading product. This expanded reach could result in increased trading volume, which is often viewed positively in the crypto space.
    • I just learned about the recent listing of Lisk's utility token LSK on Bitget exchange, I'm curious to understand how this new development might impact both the token itself and the overall Lisk project. Apparently, this listing on Bitget adds another major exchange to the roster, alongside well-established platforms like Kraken, Kucoin, Binance, and OKX. This increased availability on different exchanges generally enhances liquidity and accessibility for traders and investors. More exchange listings can potentially attract a broader audience and bring in new participants to the Lisk ecosystem. To LSK token holders, I'm interested in hearing your thoughts on this recent listing on Bitget. Do you believe it will have a significant impact on the token's value and the project's trajectory? How do you see this development fitting into Lisk's broader goals of making crypto and Web3 accessible to everyone? Let's discuss and share our insights
×
×
  • Create New...
us