Oct 12, 2022
VOT Research Desk
Market Insights and Analysis
Due of the increased ambiguity and confusion coming from both the Bank of England and the UK government, sterling continues to make headlines in the market for all the wrong reasons.
After Andrew Bailey issued a warning that the central bank will not continue its emergency intervention through this week, pound bulls took a significant hit yesterday. Prices later rose again, though, following news that the BoE would continue buying bonds after Friday’s deadline. This is not the end of it.
The likelihood of further embarrassing U-turns on the mini-Budget gave bulls renewed confidence, which currently has the GBPUSD up about 1%. Despite the recent increases, bears are still present due to the uncertainty caused by sterling’s southward-pointing path of least resistance.
This afternoon, we’ll be concentrating on pound crosses, and technical analysis will be our method of choice.
GBP/USD Not Quite Over It Yet
Given Tuesday’s bearish daily candle and the potential for a further slide in the British pound, this is likely the case. A break down below 1.0925 would indicate a selloff in the direction of 1.05200. Prices may move towards 1.1300 if 1.0925 proves to be solid support.
EUR/GBP Is Stuck in a Range
The EURGBP is still stuck in a range on the daily charts, with support at 0.8720 and resistance at 0.8850, despite the recent choppy trading. A breakout might be approaching, but it might need a fundamental spark for it to happen. Prices could decrease to 0.8650 and lower if they go below 0.8720 once more. In contrast, a significant break above 0.8850 might portend a climb toward 0.9050.
GBP/JPY Strikes Resistance at the 50 SMA
The GBPJPY has nearly completely recovered from yesterday’s steep fall. Prices have nonetheless returned to their previous range, with support at 160.00 and resistance at 164.00. A breach below 160.00 might lead to a return below 158.00. The GBPJPY could attempt 164.00 if bulls raise the currency pair above 162.00.
1.7800 GBP/AUD eyes
On the daily charts, prices are beginning to go upward, with the first important level of attention being around 1.7800. This is barely over the 200-day SMA, which might serve as a very formidable barrier. Strong price movement over this level can trigger a rise toward 1.8100. Alternately, a decline towards 1.7350 may be anticipated if there is continued weakness below 1.7800.
