The British Pound fell sharply after an unexpected report on PMI data missed expectations by way more than what was forecasted. Most pound pairs are down as GBP/USD dropped -0.62% today. The sterling suffers one of the hardest drops in a long time.
Higher Costs, Slower Growth, and Shaky Economy
Purchasing managers lost momentum for the month of April after a manufacturing PMI reading of 54.6 which missed estimates by 0.4, while services reported 7.1 points lower than March.
Costs in England have been the highest level in the past few decades. CPI is the highest it has ever been in history which has kept the economy from really improving at all. Businesses have been borrowing less money due recent inflationary concerns and this has caused companies to slash expectations this year. They have also had to increase wages significantly this year so a lot more money is going towards employees. Even with a much higher interest rate than in 2021, stagflation still remains a predominant issue for Great Britain.
The pound's behavior has done very poorly against the dollar as outlook continues to be weak. Year-to-date, GBPUSD is down nearly 7.5% and 12% down from the 2021 highs. The overall trend for the currency is a strong downtrend which is struggling to spark a shift in momentum. Every attempted bounce results in another sell off to new lows, so traders on the short side have been able to pick up sell positions at these opportunities.
GBP Trade Setups
GBP/USD (Short Bias)
GU is stuck at a resistance level on the 1D as it has seemed to form a lower high. It looks like the pair is set up for another sell opportunity although the pair has been performing relatively well this past week or so. Due to the strong overall trend to the downside, this bounce in price could be a chance to hop in on the short side once again.
GBP/JPY (Long Bias)
The pound still looks bullish compared to the yen although sentiment is mostly risk-off. The pair has had some more volatile swings this year, but ends up forming higher highs and lows. Price is currently on support which could end up maintaining at this level, but if not, the 200 DMA lies right below that.
GBP/CAD (Long Bias)
GBPCAD might have found a bottom if we zoom far out and find this bottom from September 2019. The past 4 days look promising for the pair although it is hard to tell for sure. However, this level does look heavily discounted within the past 3 years. If price can hold above 1.60927, this might be a bullish sign for the pair going forward.
Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.
Two surprises occurred this week from both central banks of Australia and Canada. Economists forecasted an unchanged discount rate, but the banks had other plans in mind. This caused a heavy positive move for AUD and CAD after reaction to the news. Here is what we are looking for in these types of pairs going […]
Over the past week, several news events paved the way of sentiment on monetary policy. Through the forest of mixed uncertainty, we can find the clearing of one asset that looks ready to take off. Gold has come back to a critical level, and it is up to smart money what happens next. EdgeFinder Analysis […]
Gold is up nearly half a percent today while USD down a third of one as of 10:18 am EST. As we wait for the upcoming and looming NFP numbers this Friday, we can assess the economic data we already have. EdgeFinder Analysis The stock market sighed in relief after the debt ceiling bill finally […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here