GBPUSD Outlook: Danger of Bearish Breakdown on Flash Crash Trendline Break

GBPUSD Evaluation and Information

GBP Stays Smooth as Service Sector Nears Stagnation GBPUSD Outlook: Flash Crash Trendline Holds for Now

Take a look at our Basic and Technical Q3 forecast information for GBPUSD

GBP Stays Smooth as Service Sector Nears Stagnation

GBP stays on defensive throughout the board with GBPUSD hovering round session lows, whereas EURGBP continues to edge greater as UK companies PMI dropped to 50.2, lacking expectations of 51. Consequently, the composite determine fell into contractionary territory at 49.7, which marked the bottom studying because the quick aftermath of the Brexit referendum. In flip, IHS Markit acknowledged that the mixed PMI surveys point out that Q2 development might present a contraction of zero.1%. As such, that is more likely to affirm BoE Governor Carney’s latest feedback that Q2 development is ready to be significantly weaker. Thus, the outlook for the Pound stays tilted on the draw back, notably with the Financial institution of England offering a extra cautious outlook. Of observe, the subsequent GDP launch is scheduled for July 10th, nonetheless, remember the fact that this can be a month-to-month studying for Could.

GBPUSD Outlook: Flash Crash Trendline Holds for Now

As political and financial dangers preserve the Pound on the backfoot, the trendline stemming from the Sterling October 2016 flash has continued to help the foreign money. Nonetheless, with draw back pressures persevering with to mount, eyes are on for a break under, which might exacerbate additional losses within the pair with a transfer in the direction of the 1.25 deal with attainable, earlier than the YTD low (1.2435)


GBPUSD Outlook: Risk of Bearish Breakdown on Flash Crash Trendline Break

Chart by IG

What Does Positioning Inform us Concerning the Path in GBPUSD?

Data exhibits 76.three% of merchants are net-long with the ratio of merchants lengthy to quick at three.22 to 1. In reality, merchants have remained net-long since Could 06 when GBPUSD traded close to 1.29202; worth has moved 2.6% decrease since then. The share of merchants net-long is now its highest since Jun 21 when GBPUSD traded close to 1.27426. The variety of merchants net-long is 9.three% greater than yesterday and 14.eight% greater from final week, whereas the variety of merchants net-short is 11.1% decrease than yesterday and 1.9% decrease from final week.

We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests GBPUSD costs could proceed to fall. Merchants are additional net-long than yesterday and final week, and the mixture of present sentiment and up to date adjustments provides us a stronger GBPUSD-bearish contrarian buying and selling bias.

— Written by Justin McQueen, Market Analyst

To contact Justin, e-mail him at

Observe Justin on Twitter @JMcQueenFX

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