GBP/USD – Prices, Charts, and Analysis
- The US dollar pushes higher but is starting to look overbought.
- UK Q4 GDP on Friday is the next focus for Sterling traders.
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The US dollar is pushing further ahead in early European turnover, buoyed by Friday’s blowout NFP report and US ISM data. The super-sized US Jobs Report – NFPs at 517k, unemployment rate at 3.4% – stunned the market with the magnitude of jobs created despite the beat being influenced by yearly population changes. The ISM non-manufacturing PMI released later on Friday also beat expectations by a wide margin – 55.2 vs 50.4 exp. and 49.2 prior – giving the greenback a further boost. The dollar is now trading at its highest level since mid-January, although the CCI indicator is showing that the greenback is in overbought territory.
US Dollar Index (DXY) – February 6, 2023
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There is little cheer for the British Pound of late. Economic data has not been strong enough to underpin Sterling against its rivals, while ongoing strikes, and the threat of more in the coming weeks, are hitting sentiment.
On Friday, the Office for National Statistics (ONS) will release Q4 GDP preliminary data. UK growth is seen stalling in Q4 of last year and may have gone into reverse, powering further recessionary fears. The recent International Monetary Fund (IMF) update suggested that the UK economy will contract by 0.6% this year, nearly one full percentage point below their earlier estimate.
Cable is trying to cling on to the 1.2000 handle today after giving up around four big figures since Thursday’s 1.2402 high print. Recent support around 1.2290 was unable to stem the sell-off and the next level of technical support is seen around 1.1950 from the 200-day moving average. The market does look oversold using the CCI indicator in the short term at least.
GBP/USD Daily Price Chart – February 6, 2023
Charts via TradingView
of clients are net long.
of clients are net short.
Retail Trader Ramp up Their Long Positions
Retail trader data show 60.10% of traders are net-long with the ratio of traders long to short at 1.51 to 1.The number of traders net-long is 5.16% higher than yesterday and 49.82% higher from last week, while the number of traders net-short is 8.81% higher than yesterday and 36.17% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.
What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
element inside theelement. This is probably not what you meant to do!