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British Pound Looks Weak around the 23.6% Fibo Level

British

The British pound continues to retreat against the U.S. dollar. This week, the GBP/USD currency exchange rate will be focused on monetary policy and rate decisions from the U.S. Federal Reserve and Bank of England.

The U.S. Federal Reserve will announce monetary policy on Wednesday. The Federal Open Market Committee (FOMC), their policy arm, is unlikely to make any changes with monetary policy. Recent weak labor numbers as well as falling consumer inflation will mean their commentary will be closely scrutinized. No matter what, Forex traders expect U.S. dollar price volatility.

On Thursday, the Bank of England will announce their monetary policy and interest rate decision. Inflation in the United Kingdom remains above the central bank’s two to three percent target. The Bank of England is expected to remain on the side line.

Also weighing on the British pound, UK Prime Minister Boris Johnson reshuffled his cabinet. He left Rishi Sunak as Chancellor of the Exchequer which calmed traders a bit. However, the GBP/USD Forex market remains weak.

The economic calendar, for Monday, is quiet. Both the United Kingdom and the United States have no economic events scheduled for release. Germany will publish their monthly producer price index (PPI).

Daily British Pound Technical Analysis (GBP/USD)

Looking at the above daily GBP/USD MT 4 price chart, the British pound is challenging the 23.6 percent Fibonacci level. This currency exchange rate is also below the 50 and 200 day simple moving averages. The technical indicators also look steady heading into a new trade week.

Basically, the GBP/USD Forex market is trading in a broad range from 1.3910, where the 100 day simple moving average and the July low price level of 1.3570.

There is immediate technical resistance in play at 1.3850. The next upside barrier lines up at 1.3910 with 1.3980 then coming into play. The next layer of technical resistance lines up at 1.4080.

On the downside, there is initial technical support at 1.3740 with 1.3670 then coming into focus. The round number of 1.36 is the next downside barrier with 1.3570 then coming into focus.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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