GBPUSD Technical Analysis Report – 9th November 2012 Forecast
- GBP/USD market sentiment overview – the BOE (Bank of England) held back from introducing additional stimulus measures today (8th November) in support of the UK economy. The MPC (Monetary Policy Committee) likewise held interest rates at the record low of 0.5% and the QE (quantitative easing) level at £375 billion. Sterling gained against most of its major counterparts as QE typically devalues the local currency, so the BoE’s decision to hold the asset purchase program was viewed as GBP positive. Market participants are also concerned about the upcoming US Fiscal cliff.
- Cable came close to the 1.5912 23/10/12 prior swing low during earlier trading, which is the lowest level seen since early September, and aligned with the 50% retrace of the last major swing higher. The pound dollar rate then pared back those losses after the BOE event risk and rallied back up to an intra-day high around 1.6004, before consolidating under the 1.6000 handle after finding resistance at this psychological level once again.
- Going forward, the 1.6000 handle continues to be the key near term area we will be watching for this currency pair on the 9th November onwards. The failure to break under the recent support lows will encourage cable bulls. Price action around this area will be monitored to gain a directional bias.
- Any upside move for the GBP/USD, on a clear break above the 1.6000 round number, would need to contend with the two-day resistance high around 1.6040. The mid-term significant range resistance highs are located around the 1.6170 area, which is aligned with the 61.8% Fibonacci retrace highlighted below. Further to this are the key 1.6300 resistance highs which brought significant offers for cable when last hit.
- A bearish continuation lower would need to break below the 38.2% Fibonacci retrace around the 1.5912 level, which held price as support on the 23/10/12. Any extended downside brings the 50% retrace of 1.5267 > 1.6308 into focus; this has confluence with the prior resistance highs around 1.5760.
GBPUSD Analysis (D1 Chart) , Technical Levels For 9th November
- In related markets , the UK FTSE closed down -0.27% at 5776.05. The US dollar index (DXY) is up but only marginally higher at 80.81 and +0.05% on the day. The EUR/USD is trading at 1.2743, the 38.2% Fibonacci retrace level of the last wave higher.
- Sterling is higher versus the euro as the EUR/GBP pair dropped -0.42% to 0.7975, after moving as low as 0.7959 on the day. Price is trading at the highlighted 50% retrace level of 0.7755 – 0.8164 (see daily EURGBP chart below). We also note that the 0.7920 area has Fe100 and 61.8% retrace confluence.