GBP/USD Following the US Greenback as Threat Seems to be to Ease

GBP/USD – Prices, Charts, and Analysis

• Cable can be pushed by danger sentiment within the coming days.
• Chancellor Jeremy Hunt says the UK will keep away from a recession.

Financial markets are taking a breather in early turnover at present after yesterday’s flight to high quality. The rollover of banking fears from the US to Europe prompted a widespread, and at occasions pretty indiscriminate, dumping of danger property, will haven property such because the US greenback, US Treasuries, gold, and the Japanese Yen all picked up sturdy bids. The danger tone available in the market at present has been helped by information the beleaguered banking group Credit Suisse has been thrown a 50 billion Swiss Franc lifeline by the Swiss National Bank to shore up its stability sheet. At one stage yesterday, the CDS market was pricing in a close to 50% likelihood of Credit Swiss defaulting. With the market barely calmer at present, the US greenback has moved decrease permitting a spread of USD pairs, together with cable, to push larger.

Later within the session at present, ECB President Lagarde will announce the central financial institution’s newest financial coverage choice. At the final assembly, Ms. Lagarde mentioned that there could be a 50bp hike at present however this should now come into query in opposition to a background of economic stress and potential contagion.

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Wednesday’s UK Spring Budget was missed because the fast-moving occasions and actions within the market took heart stage. Chancellor Hunt did say that the UK would keep away from recession in 2023 and that inflation would fall from 10.7% within the ultimate quarter of 2022 to 2.9% by the top of the yr. While nonetheless above the central financial institution’s goal of two%, this sharp fall will give the Bank of England the flexibility to pare again on additional charge hikes if required.

UK Spring Statement: Hunt, OBR Forecast the UK Will Avoid a Recession

Next week is an enormous week for cable merchants with the FOMC charge choice on March 22 and the Bank of England’s subsequent coverage assembly on March 23. Current market pondering on what every central financial institution will do is combined and altering on a regular basis, so the one factor that may be assured subsequent week is additional volatility.

Lessons for Traders on Extreme Volatility from 2017 and the Summer of 2014

Cable is transferring larger at present after yesterday’s sell-off and trades on both facet of 1.2100. The short-term bearish channel stays in play and the CCI indicator exhibits the pair in overbought territory. The transfer larger nevertheless has been supported by each the 20- and 200-day transferring common, and a confirmed break of the 50-dma, at the moment at 1.2137 might see the pair check Tuesday’s 1.2204 excessive.

GBP/USD Daily Price Chart – March 16, 2023

All Charts by way of Buying and sellingView

Retail Trade Data Paints a Mixed Picture

Retail dealer knowledge present 56.52% of merchants are net-long with the ratio of merchants lengthy to brief at 1.30 to 1.The variety of merchants net-long is 11.56% larger than yesterday and 34.88% decrease from final week, whereas the variety of merchants net-short is 23.36% decrease than yesterday and 12.54% larger from final week.

We sometimes take a contrarian view to crowd sentiment, and the very fact merchants are net-long suggests GBP/USD costs might proceed to fall. Positioning is extra net-long than yesterday however much less net-long from final week. The mixture of present sentiment and up to date modifications offers us an extra combined GBP/USD buying and selling bias.

What is your view on the GBP/USD – bullish or bearish?? You can tell us by way of the shape on the finish of this piece or you may contact the creator by way of Twitter @nickcawley1.