GBP/USD drops further to as low as 1.6669 so far and intraday bias remains on the downside. Sustained trading below 1.6692 key support will confirm larger reversal. And in that case, the fall from 1.7190 medium term top should target 1.6251 cluster support (38.2% retracement of 1.4813 to 1.7190 at 1.6282). On the upside, break of 1.6844 resistance is needed to signal short term bottoming. Otherwise, outlook will stay bearish in case of recovery.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we'd expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.
Intraday bias in GBP/USD remains on the downside for the moment. As noted before, a medium term could be formed at 1.7190 already and the trend is reversing. Deeper fall should be seen to 1.6692 key support level for confirmation. On the upside, above 1.6928 minor resistance will turn bias neutral and bring consolidations. But recovery should be limited below 1.7058 resistance and bring fall resumption.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we'd expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.
GBP/USD remains on the downside for the moment. Correction "A" target should be seen to 1.6692 key support level for confirmation with the double zigzag type on H4 .
Intraday bias in GBP/USD remains on the downside for the moment. As noted before, a medium term could be formed at 1.7190 already and the trend is reversing. Deeper fall should be seen to 1.6692 key support level for confirmation. On the upside, above 1.6954 minor resistance will turn bias neutral and bring consolidations. But near term outlook will stay cautiously bearish as long as 1.7058 resistance holds.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we'd expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.
GBP/USD's fall accelerates to as low as 1.6894 in early US session and intraday bias remains on the downside. A medium term top could be formed at 1.7190 already and the trend is reversing. Deeper fall should be seen to 1.6692 key support level for confirmation. On the upside, above 1.6954 minor resistance will turn bias neutral and bring consolidations. But near term outlook will stay cautiously bearish as long as 1.7058 resistance holds.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Based on unconvincing medium term momentum, we'd expect strong resistance from 50% retracement from 2.1161 to 1.3503 at 1.7332 to limit upside and bring reversal. Sustained break of 1.6692 will indicate medium term reversal and would turn outlook bearish for 1.4813 support.
Although the British pound has retreated after rising to 1.7192 earlier this month and consolidation below this level is in store, as long as support at 1.6952 holds, prospect of another rise remains, above 1.7095-00 would signal retreat from 1.7192 has possibly ended, bring test of 1.7150 but only break of said resistance at 1.7192 would signal recent upmove in wave (C) of the (A)-(B)-(C) wave 4 is still in progress for further gain to 1.7250, then towards the equality projection level of wave (A) at 1.7333. Having said that, sharp move beyond there should not be repeated and reckon cable would falter below 1.7500 and risk from there is seen for a strong retreat in late Q3 or Q4.
Our preferred count on the daily chart is that the major decline from 2.1162 top (9 Nov, 2007) is a 5-waver with wave 1: 1.9337, 2: 2.0399, extended wave 3 has ended at 1.3500 and wave 4 is an (A)-(B)-(C) correction which may bring further gain to 1.7180 but upside should be limited to 1.7333 (equality of wave (A)), bring decline in wave 5 later this year or in 2015.
On the downside, a break of said support at 1.6952 would defer and suggest top is possibly formed and risk correction to previous resistance at 1.6845-50, break there would add credence to this view and bring retracement to support at 1.6693-99, below this level would confirm, then further fall to previous support at 1.6660 and 1.6600 would follow.
Recommendation: Hold long entered at 1.7050 for 1.7250 with stop below 1.6950
Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave 3 ended at 1.3500 (23 Jan 2009), wave 4 itself is possibly unfolding as either a triangle or an (A)-(B)-(C) and upside should be limited to 1.7333, price should falter below 1.7500 and bring another decline later. Below support at 1.6460 would suggest top is possibly formed, bring test of another previous support at 1.6252 but a sustained breach below there is needed to confirm, bring further fall to 1.6000, then towards support at 1.4814 (2013 low). Looking ahead, once this level is penetrated, this would signal wave 4 is over, then further decline towards 1.4228 support would follow, break there would signal the wave 5 has commenced for weakness to 1.3800, then retest of 1.3500 support.
Dear traders, I would like to apologize about my lack update of my analysis due to my busyness of my new daily routine from where i worked at local broker.
but on this opportunity, i ve seen that all currency is on critical issue lately, especially gbpusd. the final triangle had already seen as the last high of wave "E" is at around below 1.6500.
Our first target in on 1.6380 has already to break for another assumption of gap issue on the last legs of "B" pattern.
We should realize that the mission of this month is finding closing price of yearly. So in that case we assume that the new trend would be on next year. But we should also realize that the start of new trend is not on the highest high, so this month mission are as double mission for finding closing price and entry for new trend .
Today issue is on FOMC meeting as important movement of GBP. As you can see below on picture, the target of today's volume before FOMC is on fibo 0.618 of yesterday daily range that acted as today's Low and 1.618 as today's high. This is still indicate that the possibility of another correction pattern may occur. because yesterday volume is nearly the same as today's volume. That is typical of A-B correction.
This scenario has give us another possibility the next target would be nearly the first of wave of A or on yesterday Low or there is also possibility to break with estimate between 1.6115 to 1.6070
But we should considering of this weekly volume that still on 120pip. is it Logical?
The complicated pattern and the mixed between UK and US data has give us uncomfortably decision on latest entry.
Our target as you can see on picture is describe that from the bottom of latest trend of ranging that is the wave of A-B and the current target will nearly last month high
the key of the target is today low, as you can see on marked on blue rectangle the volume of first trend usually the same as today or current trend. The first volume of trend reached 160 point, so we assume if the first motive was begin on 1.6103 so the next target will be on 1.6248
After reach the target we assume that GBPUSD will finding the last entry for bearish trend.
GBPUSD still reaching bearish target, the formation pattern would be making another impulse or downtrend with minimum correction, typically the volume target will the same as on first wave.
if you can see the image above, there is x---A-B---C (current on target).
Just what we said before on last month analysis, GBPUSD will continue in bearish that making important pattern that the target is done based on what we marked before, why its important pattern?
the pattern of GBPUSD has found the "E" target of major triangle pattern, this mean it could be the new trend would be come probably for next year, but we should await on completed bottom target and review the pattern, because it is also have possibility of making "F"-"G" and "H" as complicated triangle. That show that GBPUSD still await on fundamental issue.
The Key of the pattern is based of if this will making as impulse or another correction bearish.
Beware of the GAP its usually indicated that the bullish is weak, this mean the target are moved into below, you can see the sample the power of gap on usdjpy.
GBPUSD has reach the "B" correction pattern the target is on 2nd wave of "A" . this indicate to be flat pattern and should be ended on wave "A" or above.
GBPUSD Outlook | Written by ActionForex.com | Nov 09 13 03:50 GMT
GBP/USD continued to stay in range of 1.5894/6259 last week. Initial bias remains neutral first. Overall outlook is unchanged. In case of another rise through 1.6259, we'd expect strong resistance from 1.6380 to bring reversal eventually. On the downside, break of 1.5903 should now confirm topping and turn near term outlook bearish and should target 1.5751 resistance turned support first.
In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161. Current development suggests that it's still in progress. It's possible that rise from 1.4813 is the fifth leg of a triangle pattern and in that case, we should see strong resistance below 1.6380 to limit upside and bring down trend resumption finally. Meanwhile, break of 1.6380 will indicate that rise from 1.4813 is the third leg of the consolidation pattern and should target 1.7043 instead.
In the longer term picture, the complicated triangle pattern from 1.3503 argues that it's the fourth wave of the five wave sequence from 2.1161. That means, firstly, 1.3503 shouldn't be the end point of the downtrend yet and a new low is expected. However, secondly, as the next fall could be the fifth wave, the breach of 1.3503 could be shallow and brief from long term point of view and we'll then see a more sustainable rebound.
This week GBPUSD move as correction to yesterday impulse, the target usually on wave 4. and built another pattern it might be flat pattern.
klik for bigger size
The characteristic of flat (as you can see on the image) is on the first wave is targeting on 4th and bounching back bearish to wave 5 and ended again on 4.
When will interest rates rise? Growing divide between economists, markets and the Bank over when an increase will come
By SIMON LAMBERT -dailymail
UPDATED: 09:01 GMT, 8 November 2013
LATEST
Base rate was held once more at 0.5 per cent yesterday but a growing divide is emerging between the Bank of England's forward guidance, the money markets and some economists on when it will have to rise.
Britain's rapidly improving economy has not dramatically pulled forward money market expectations but another forecast for a swifter increase arrived this week from think tank the NIESR.
There is a view gaining increasing traction that unemployment will fall faster than the Bank predicted in its forward guidance, which pledged to not consider a raise until this was below 7 per cent.
But this week’s forecast of rates needing to go up sooner was not tied to this. Instead an earlier rise was tipped by the NIESR, to keep the economy from overheating. It said rates would move off their record low in 2015 - earlier than the Bank of England's late 2016 forecast.
Divided: A gap is emerging between Mark Carney's forward guidance and what economists say will happen to interest rates.
The economists who believe the Bank will find it impossible to stick to its predication are looking at the property market, economy and confidence heating up.
The NIESR predicts an ahead of schedule increase to stop low rates from causing instability - with rising consumer spending and house price inflation the potential triggers.
In contrast, money markets have calmed since their late summer wobble and now put a first rise slightly earlier in 2016 than the Bank does. They also suggest that even if an earlier rise comes, rates will stay low for a long time
All eyes are now on the Bank's inflation report on November 13 and whether it will stick to its forward guidance guns in that.
Strong GDP growth of 0.8 per cent was reported while minutes from the Bank of England monetary policy committee meeting showed members admitting they foresee unemployment falling faster than previously predicted as a result of the stronger economic growth. Read more here.
Swap rates, which measure the cost of fixed term borrowing, have risen slightly over the past week. Five-year swaps stood at 1.755 on 6 November, up from 1.664 per cent on 28 October. Two-year swaps stood at 0.845 up from 0.805 per cent.
Holding steady: Consumer prices stayed at 2.7 per cent in September despite falls in petrol prices, food and airfares
Forward guidance, inflation and unemployment
The all important numbers for the interest rate outlook show both inflation and unemployment proving sticky.
Higher than expected inflation, at 2.7 per cent, was offset by no drop in unemployment to keep interest rates set reasonably fair for no rise from 0.5 per cent until 2016.
The Bank of England has laid out a plan to keep rates at 0.5 per cent until 2016, unless unemployment falls to 7 per cent, or the inflation outlook spikes.
Money markets have calmed after initially rejecting this forward guidance as unrealistic and now also suggest a first rate rise will not come until early 2016 - slightly earlier than the Bank's forecasts.
The unemployment rate held steady at 7.7 per cent in the three months to the end of August, official figures showed. A potential fly in the ointment for low rates for longer was that despite this, the claimant count – those people claiming jobseeker’s allowance – fell at the sharpest rate since 1997.
The Office of National Statistics showed the fall in the overall unemployment figure was 18,000 in the three months to the end of August, taking the total jobless figure to 2.49million - or 7.7 per cent of the UK's available workforce.
Yet at 41,700 the fall in the claimant count well surpassed expectations for a drop of 25,000 and the number of people in full time jobs also rose 148,000.
Some economists suggest we could therefore see unemployment at 7 per cent by 2015 and a stronger than expected recovery could see rates rise sooner than tipped.
However, the Bank and other analysts argue that Britain has plenty of underused jobs capacity and unemployment may fall more slowly, as firms up the hours of those working part-time and more of those not currently actively looking for work start to do so.
Bolstering that case, the ONS figures also showed that 1.45million people were working part-time because they could not find full-time jobs, the highest figure since records began in 1992.
Inflation stuck at 2.7 per cent in August, higher than expectations of a dip to 2.6 per cent. The ONS said despite the fall in food, petrol and diesel prices other contributing factors to CPI saw little change compared to most months.
Petrol prices have declined further in recent weeks and could have a bigger impact on October's cost of living measure.
But further ahead utility bill rises could have an upward effect, after SSE last week became the first of the Big Six energy firms this year to announce a hike in gas and electricity tariffs. Other major energy firms are tipped to soon follow suit.
Robust growth: Economists described the employment figures as showing economic conditions were continuing to improve
Forward guidance vs inflation
The UK interest rate outlook has undergone a transformation with this initiative from Mark Carney, which was launched alongside his first quarterly inflation report as Bank of England governor.
He has pledged that rates will not go up as long as the unemployment rate remains above 7 per cent. The Bank itself projects a very slow recovery that will not see it fall below 7 per cent much before late 2016.
The move has been broadly welcomed by the markets and economists, although they have indicated the Bank may be overly pessimistic and rates could go up sooner than suggested.
While forward guidance has many supporters, there are fears that the Bank will be painting itself into an even tighter corner by saying when it expects to raise base rate.
It is already hamstrung by the nation's high levels of mortgage debt and the more mortgage lending that is done at low interest rates now, the harder it will be for homeowners to stomach rates returning to anywhere near normal.
Luckily, for those borrowers but unfortunately for savers, economists don't predict a rise anytime soon.
When will rates rise? The benchmark chart from the inflation report shows how money markets expect rates to rise.
QE vs Funding for Lending
Should the economy take another serious turn for the worse, more QE is forecast, but if it continues along the current path the Funding for Lending scheme is tipped to be the most likely stimulus for the near future - allowing banks and building societies to take cheap cash from the Bank and pass it on to mortgage borrowers and businesses.
The jury is still out on whether Funding for Lending is a winner.
It has driven mortgage rates down substantially, albeit with the best benefits delivered to those with big deposits, but banks are still being accused of hoarding cash and shunning small and medium-sized businesses.
Figures are being skewed by mammoths Lloyds Banking Group and Royal Bank of Scotland winding down their historical loan books and Spanish giant Santander easing back on its former mortgage expansion policy.
One group undeniably hit very hard by Funding for Lending has been savers. Returns on savings accounts have dived since its launch in a race to the bottom that has seen big cuts in the best deals on offer.
The best easy access savings rate now stands at just 1.6 per cent, whereas before the launch of Funding for Lending savers could get between 2.5 per cent and 3 per cent.
Mind the gap: How base rate and inflation have moved over the past 24 years - the dramatic slashing of rates since the financial crisis shows how far from normal we are.
Rollercoaster ride: The inflation report chart shows how money market and economists' expectations of when a first rate rise will come have moved.
HOW DO YOU FORECAST FUTURE INTEREST RATE RISES?
We can't - no one can. But we look at overnight swap rates to work out roughly when money markets forecast the Bank Rate will start to rise from the rock-bottom level of 0.5 per cent.
This is very far from a precise business - not only do financial traders make wrong predictions all the time, but swap rates are only a snapshot of their views at a given moment in time.
Money market forecasts often diverge from reality, as well. For instance, swap markets for some time predicted a cut to 0.25 per cent within the next few years, well before a hike to 0.75 per cent is likely to materialise.
However, this was considered most unlikely to happen even though the Bank rate-setters dutifully discussed it every month. Economic experts say that for practical reasons it could curb lending rather than increase it, making it counterproductive as a method of promoting recovery.
The overnight swap rates move substantially. Take a look at the following chart, which appeared in the May Bank of England inflation report and illustrates interest rate projections in May compared with February. There is almost a two year gap between the outlook just a few months apart.
Outlook: The Bank of England's May Quarterly Inflation report mapped out the market's expected path for Bank Rate.
Like the Bank of England, we use the overnight index swaps curve to look at what the money markets are predicting for interest rates, and importantly how this is shifting.
Economists also make predictions of when rates will go up, which are often quite different from those signalled by the money markets.
We frequently quote their views here too if they help shed light on the issue for readers.
You can then consider all the available information and make your own best guess on when interest rates will rise.
Why 'swap rate' money markets matter to savers and borrowers
When markets move a decent amount - and the move holds - it can affect the pricing of some mortgages and savings accounts. When swaps price a rate rise to come sooner, fixed rate savings bonds tend to marginally improve in the weeks that follow. But it also puts pressure on lenders to withdraw the best fixed mortgages.
As for using swaps as a forecast, we've consistently warned on this round-up that they are extremely volatile and should be treated with caution - they should be used more as a guide of swinging sentiment rather than an actual prediction.
Important note: Markets, economists and other experts haven't had a great record of making the right calls in recent years: 2010 predictions2008 predictions.
This is Money has always advocated caution with any sort of prediction (including our own!). There's no guarantee that those who have made correct calls in the past will make them in the future.
We'd also urge consumers not to gamble with their personal finances when it comes to predicting rate swings.
Rate rise predictions: Money markets and economists
Swap markets reflect the City's bank rate expectations - not in an exact way, but they indicate trends in forecasting.
Some swap rate prices and and charts are displayed below to show how the market moves as economic prospects shift.
One year ago - 2012
8 August 25 July (after dire GDP figures) • 0.91% - one year • 0.80% - two years • 1.03% - five years
• 0.82% - one year • 0.80% - two years • 1.07% - five years
2 October • 0.75% - one year • 0.71% - two years • 1.00% - five years
21 November • 0.67% - one year • 0.70% - two years • 1.06% - five years
12 December • 0.65% - one year • 0.66% - two years • 1.00% - five years
This year - 2013
16 January 2013• 0.67% - one year• 0.72% - two years• 1.12% - five years
19 February• 0.64% - one year• 0.69% - two years• 1.19% - five years
Five-year swaps (influences 5-yr savings bonds and fixed mortgages) Since January 2010
Beware false dawns
In early 2010, markets prematurely began pricing in a greater chance of rate rises because of rising UK inflation. They did the same again in early 2011. But as we've repeatedly argued on this round-up, deflation rather than inflation has remained the greater long-term threat. Treat claims of rapidly rising rates with caution!
What decides rates?
The BoE's Monetary Policy Committee meets once a month and sets the bank rate. Its government-set task is to keep inflation below 2% (and above 1%), looking two years ahead. So if inflation looks likely to pick up, it raises rates.
Viewpoint: Why rates WILL rise
The 'inflation nutters' (in the words of former BoE MPC member Adam Posen) fear that measures aimed at reviving the economy - rate cuts and masses of quantitative easing - have unleashed forces that will create rampant price rises and that rate rises will be needed to prevent hyperinflation taking hold. They also fear rising demand from emerging market economies will push up prices.
When inflation was worryingly high in 2011, these views gained traction.
One popular theory is that Western governments want to create inflation to try and erode their record debts, created in part by bailing out banks. Billionaire Warren Buffett (right) warned about this in August 2009 well ahead of the pack (as usual).
One controversial economist warned inflation would force the MPC into a series of rate rises, taking the bank rate to 8% by 2012.
Weak sterling in 2010 and 2011 also added inflationary pressure: falls in the pound make it more expensive for Britons to buy foreign goods, effectively importing inflation. [ what next for the pound?] And we're also importing inflation from booming China.
Others point out that rapid rate rises are rarely expected. Insurance service RateGuard points out periods of quick-fire increases in the chart below.
Central bank rates in the run-up to the crisis
This round-up was created in 2007 by Andrew Oxlade and downloaded more than 13 million times. His involvement ceased in December 2012 and it is now updated by the ThisisMoney team.
