Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
GBP vs EUR and USD: strategic look
Information is not investment advice
Brexit is stalled, but both the EU and the UK express hopes for a successful resolution. These hopes recently sparked an aggressive spike the GBP went on against the EUR and the USD. What’s the technical outlook?
As surprising as it may sound, those strong moves don’t introduce any change into the existing trends. On a daily chart below, the last large green candlestick is exactly the rise of GBP/USD on Wednesday. The move was really big and doesn’t even have a similar one in magnitude on this panorama. But tactically, it falls well into the uptrend that has been in the place since the middle of September. From below 1.30, GBP/USD rose above 1.31. Most probably, it will go into bearish correction above 1.30 to eventually reverse and rise back above 1.31 on the other side of the uptrend.
Pretty much the same applies to EUR/GBP. After hanging above 0.9040, it plunged down to almost 0.9000. Tactically, that’s just another wave in in a local downtrend that has been in the place since the middle of September. A large one though – you can see that last long red candlestick between 0.9150 and 0.9000. Strategically, that downtrend itself is just another wave in a larger gradual uptrend that’s visible all across the chart. So the observers are right to say that Brexit is merely a local episode for the UK economy – the fundamental factors is what matters.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.