The GBP/USD is enjoying its best run in a long time as it has surged higher to a new four month high near 1.57 towards the end of last week. Since that time it has just eased back a little under the long term key level of 1.56. Late last week it experienced its strongest 24 hour period in a while as it surged up through 1.56 to within reach of 1.57. A couple of weeks ago the pound did well to surge higher and move back through the 1.52 before easing off slightly. In doing so, it moved through 1.5150 which it had previously experienced some difficulty with over the last week or so. A couple of weeks ago it also received solid support from 1.50 which has given it the opportunity to rally higher and move back above 1.52 again. At this same time, it did move to a lower level and therefore reached a new two month low close to 1.50 before the strong surge higher since then. A few weeks ago it found some support around 1.5160 however this level was clearly broken as it fell down towards 1.50.
The pound has now completely reversed its fortunes from the horrible May that it suffered through which saw it drop from 1.56 down to the two month low near 1.50. Prior to the last month, the pound enjoyed a strong couple of weeks and move to new highs above 1.56. It experienced all sorts of bother at 1.56 as it made several pushes to this significant level however it was turned away with excessive supply. For about a week it ran into a wall of resistance right around the 1.56 level, as you can see in the middle of the daily chart below, so it has interesting that it how now returned to this level and been sold back down again. The pound had enjoyed a very solid couple of weeks moving from the support level at 1.52 to reach new highs near 1.57. Back around mid April the pound experienced solid support at 1.52 for about a week which greatly assisted the recent surge higher, and recently this level was called upon again to offer some support and a soft landing, however the pound fell strongly through it on its way down to near 1.50. A couple of weeks ago, we saw some evidence that the decline had been slowed down as it traded around 1.52 for about a week whilst receiving solid support from around 1.5160.
Throughout the month of May saw the pound fall strongly and return almost all of its gains from the few weeks before that. About a month ago the 1.54 level provided a little piece of resistance and this level has since been broken as it offered limited support. In early March the pound moved to new lows around 1.4830 from a starting point near 1.64 at the beginning of the year. With the surge higher throughout March and April, the GBP/USD had completely turned around its fortunes from earlier in the year, however May saw ease off and return most of the good work.
Britain’s monthly exports to China have hit the £1bn level for the first time amid signs that UK firms are diversifying away from the crisis-hit eurozone. The Office for National Statistics said there had been a marked shift in Britain’s trading patterns over the past 18 months as it revealed that the country’s trade gap narrowed by £600m in April. Latest data showed that the trade gap in April fell from £3.2bn to £2.6bn as imports fell more sharply than exports. An £8.2bn deficit in goods was partly offset by a £5.6bn surplus in trade in services. Both imports and exports fell in April, but the 2.7% decline in the value of imports outstripped the 1.3% drop in exports. Over the three months to April – considered a better guide to the underlying trend by the ONS – the deficit in goods and services widened by £500m to £9bn.
GBP/USD June 10 at 03:50 GMT 1.5539 H: 1.5562 L: 1.5516
During the early hours of the Asian trading session on Monday, the GBP/USD is consolidating right around 1.5550 after having recently just eased back a little from the key 1.56 level. Throughout the first part of this year, the pound fell very strongly from the key resistance level at 1.63 level down to levels not seen in two and a half years and has done well the last month to rally well and move back up above 1.56. Current range: Right around 1.5550.
Further levels in both directions:
• Below: 1.5200 and 1.5000.
• Above: 1.5700.
(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 long positions ratio has slipped well below 50% as the GBP/USD continues to move higher. Trader sentiment has shifted to in favour of short positions.
Economic Releases
- 05:00 JP Consumer Confidence (May)
- 05:00 JP Economy Watchers Survey (May)
- 08:30 EU Sentix Indicator (Jun)