GBP/USD slumped to mid point of 1.29 mark

During yesterday’s session GBP/USD pair was quite hesitant but overall still manages to retain the bearish bias. Following the BoJ’s statement this morning the pair slumped to 1.2945, but shortly afterwards retreated to 1.2967. The policy framework presented today by BoJ to keep rates unchanged fueled the US dollar’s strength and pushed the USD index 0.25% higher.

Fist resistance that should be considered is located at 1.3050, above which 1.3100 would be tested. On the downside, a clear break and daily close below 1.2900 might bring the price down to test 1.2790. As long as the pair stays below 1.3500, the bearish scenario is still is pace.

NFP weakened the US dollar

The NFP wave made the US dollar suffer with significant losses as the released data for May disappointed market participants. The results showed only 38,000 jobs created amid the expectations of 160,000 and the weak data dipped the US dollar 1.6% against the major currencies.
Following this the likelihood of an increase in interest rates by Fed next week slightly thinned, which reflected to the dollar. In view of the forthcoming referendum in Britain, central bankers may refrain from actions this month. Expectations for rates hike in July also decreased, but probably Janet Yellen will draw attention for possibly tightening the monetary policy later today in Philadelphia.
On Friday the dollar dipped against the yen to 106.50 as a result of negative data, but today started the week with declines again to return around the levels at 107 during the early trading. The pair nears the crucial level at 105 and this awakes the fluctuation about intervention by the Tokyo authorities in the foreign exchange market.
The greenback lost ground against the single currency. The euro climbed to 1.1373 after last week had depreciated to 1.1097. Despite the losses for the greenback due to weak data, overall  US economy remains framed and a rates hike is more likely to be postponed this month as now the focus is more on vote in UK rather than the employment report.
The British pound fell 0.8% against the US dollar this morning, because it became clear that the preliminary surveys showed Leave side ahead. Sterling dipped to 1.4351 dollars.

London BREXIT Update: One month to Referendum | Webinar review

Brexit time nears and very soon the fluctuation that has towered UK  will  vanish.
The more referendum campaign intensifies, the more UK economy is seen in underlined shaky mode.
But until 23th June the walls of uncertainty will be standing still and most important now is how to outrun the fears that chase the market.

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The most important questions that will follow Brexit are:
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2. Will we see further EU integration or the opposite?

Brexit scenarios implemented in short and long term are very well explained by this pattern:

What will be the market reaction in short and long term view?
First of all we should think about what will be the short term market reaction driven by the possible consequences for the remaining EU members and then to take into consideration the long term market development based on the assumption of EU development in case of split or integration.

With the upcoming Brexit referendum definitely traders are concerned about trading the GBP forex pairs. Paul Wallace shed a light over the most likely scenarions and shared some tips how traders might be positioned.

Important information

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Forex: GBPUSD, GBPCHF, GBPAUD, GBPCAD, GBPJPY, GBPNZD, EURGBP

Indices: UK100

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Forex: EURUSD, EURJPY, EURCHF, EURAUD, EURCAD, EURNZD, EURHUF, EURNOK, EURSEK, EURSGD, EURTRY
Indices: BLG20, ESP35, EURO50, FRA40, GERTEC, GER30, ITA40, NETH25
Shares: CFD tools on British shares

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GBP/USD

During the last week GBP/USD performed tentatively and showed lack of strength.
The pair attempted to rise higher, slipping above the key resistance at 1.4700, but failed to make a clear break upside and closed lower at 1.4604. 

Currently the descending momentum prevails and bears are likely to test 1.4500. Immediate resistance is seen at 1.4650, followed by 1.4740, which is the 200-day moving average. 

Looking at the upside, any indicative break above and eventual daily close above 1.47 would awake the bulls and the pair might push towards 1.5000 level.

Elevated perspective

Considerable polling excitement has engaged UK lately, but most remarkable stir on markets came from yesterday’s Brexit poll results, showing that Britains prefer to remain member of the European Union. 
The sterling outperformed during the overnight trade and GBP/USD was trading within the range of 1.4478-1.4497. The British pound seized this optimistic opportunity and today is looking from elevated perspective. Currently GBP/USD is trading at 1.4579, 0.66% higher and conquered Monday’s high at 1.4548.
Ahead of BoE officials speak in the UK Parliament about the central bank’s latest quarterly Inflation Report before the Treasury Select Committee, the pair might be seen even more elevated and surpass the 1.46 mark.

Sterling hovers around $1.45 after set of weak PMIs

Business activity in the services sector in the UK has deteriorated in April, posting uninspired start of the second quarter with hitting lowest levels since February 2013.

UK services PMI for April, according to latest Markit release, shows that the British economy is further slowing down, noting a drop to 52.3 points in April, down from 53.7 points in March amid the expected 53.5 points.

A weaker PMI underlines the additional weakness in economic growth, that indicates it will slow down in the short term.

So finally, within this week the three PMIs (construction, manufacturing and services) fell short of the expectations and thereby GBP is under selling pressure.

GBP/USD is currently trading around 1.45, as daily low was hit at 1.4444. If the pair continue to the downside, the pair most likely will break through the support located at 1.4360. On the upside a key resistance is located at 1.4670.

GBP/USD

GBP/USD was grasped by bears on Wednesday and the beating continued today, when earlier in the morning the pair hit $1.4120.

The pound slipped with 0.45% and is trading close to intraday lows around $1.4135. An impulse to the shaky pound was set by the rising frustration of Brexit misgiving.

Some more volatility is expected later on today during the US session.

On the agenda for the day regarding the macroeconomic news, major event is the Bank of England meeting. It is supposed that BoE will leave monetary policy unchanged, along with the main interest rate pinned at 0.5% and the annual pace of QE planned to remain at £375 billion.

The sentiment for the pair remains bearish and we may expect testing of the first support at $1.4100. Immediate resistance is seen at $1.4175 followed by $1.4240. A clear break above that area could lead price to neutral area testing $1.4280. 

GBP/USD in weekly prespective

The macroeconomic calendar for the week ahead will flourish with colourful events.

The pound is still chased by the fear of further decline and is about to start running back below the psychological level of $1.40.

GBP/USD is jumping around volatile frustration as the uncertainty enveloped Brexit obsess the pound. But on the other side, the surprising dovishness by Fed has shattered the US dollar and this  trend most possibly will remain in the next few days.

$1.40 - $1.4050 area is yet a key support zone and until up, some upside movement is possible with target levels of $1.4150 and most likely $1.4240. A break below this support might bring back the bears and the pair might rush downwards to $1.3850.

Under pressure

The US dollar remains under pressure for a second straight day of trading after the surprisingly cautious speech by Fed president Janet Yellen on further increases in US interest rates this year.

Earlier today, the euro rose to 1.1338 dollars - slightly below its highs for the year around 1.1342 / 76 area before stabilizing around the 1.1300 level. And it was just beaten after the another report, showing how funky strong is the job growth in the US for March.

The British pound rose to a 10-day high of 1.4451 dollars glancing  4-week high of 1.4513 dollars, struck on 18 March, despite the bell rings inside UK, that’s challenging the doors of Brexit.
Meanwhile, the dollar fell to nearly 10-day low of 112.02 yen, but the good risk-appetite of global capital markets cut the appreciation of the Japanese currency since it lost its safe heaven status.

Mario Draghi’s speech overwhelmed the markets

The euro erased its initial losses after European Central Bank (ECB) President Mario Draghi hinted that it is not expected a further reduction of key interest rates in the eurozone.

Surprisingly the massive new stimulus measures taken by the European Central Bank at today's meeting led for a short time to a drop in the euro to 5-week lows at 1.0822 dollars and 0.7652 pounds. The single currency managed to hit a weekly low at 1.0891 swiss franks and dropped to hourly day low at 123.65 Japanese yen.

But the following  comments by ECB governor Mario Draghi that he does not expect a further reduction in key interest rates led to a sharp rebound of the single currency to a two-week high of 1.1115 dollars. Meanwhile, the euro rose to a one week high of 0.7797 pounds to three-week high of 126.24 Japanese yen.

The initial euphoria of the European stock markets caused by today's decision of the ECB to undertake a series of aggressive stimulus measures is fading away. It looks like investors began to realize that today's fall in deposit interest rates of ECB to -0.4% is a "double-edged sword," especially with regard to commercial banks and their profits that form the largest part of the ongoing credit policies.

After an initial rise in the main European stock indices by between 2.5% and 3.0% at the end of trading today they wiped out a large part of their profits. Now the common European Stoxx Europe 600 index rose by a modest 0.83 percent, Germany's DAX rose 1.37%, while the French index CAC40 - by 1.49%. Passing the initial euphoria is due largely to the sharp appreciation of the euro, which is potentially negative for export-oriented companies in the eurozone.