It’s likely we’ll see action in GBP/USD as both the Federal Reserve and Bank of England will give their latest monetary policy statements very soon. This makes the tight channel higher in GBP/USD one to watch for various setup opportunities.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12405.07 +0.26% FTSE: 7320.76 0.00% S&P 500: 2998.36 -0.24% DJIA: 27047.02 -0.24% |
US 10-yr 1.616% -0.048 Bund 10-YR -0.507% -0.033 UK 10-YR: 0.645% -0.005 JPN 10-YR: -0.178% -0.022 |
Oil: 58.46 -1.48% Gold: 1514.90 +0.10% Bitcoin: 10175.00 -0.14% Etherium: 214.09 +2.08% |
Fresh Market Headlines & Economic Data:
- Trump orders Mnuchin to ‘substantially increase’ sanctions on Iran
- Oil extends declines after Saudi pledge to restore lost output
- U.S. Mortgage demand from buyers jumps, just as interest rates spike
- U.S. housing starts race to 12-year high in August
- U.K. inflation rate falls to the lowest since 2016 on clothes
- U.K. parliament suspension not a matter for judges, PM Johnson’s lawyer tells Supreme Court
- No deal Brexit ‘a big significant risk’: Scotland’s Sturgeon
- The Conference Board Leading Economic Index for Australia decreased 0.2%t in July 2019 to 107.2
- New Zealand’s seasonally adjusted current account deficit was $2.4 billion
- Japan’s exports fell for ninth straight month in August
Upcoming Potential Catalysts on the Forex Calendar:
- FOMC monetary policy statement at 7:00 pm GMT
- New Zealand GDP at 11:45 pm GMT
- Bank of Japan monetary policy statement (tentative)
- Australia employment at 2:30 am GMT (Sept. 19)
- Swiss National Bank monetary policy statement at 8:30 am GMT (Sept. 19)
- European Current account at 9:00 am GMT (Sept. 19)
- U.K. Retail sales at 9:30 am GMT (Sept. 19)
- Bank of England monetary policy statement at 12:00 pm GMT (Sept. 19)
- Canada ADP Non-farm employment at 1:30 pm GMT (Sept. 19)
- U.S. Philly Fed manufacturing, current account & unemployment claims at 1:30 pm GMT (Sept. 19)
What to Watch: GBP/USD
We’ve got a flood of monetary policy decisions and commentary from four of the major central banks, but the likely action will come from the Federal Reserve later in the U.S. trading session and the Bank of England in the Thursday London session. Expectations of a 25 bps cut from the Fed and no action from the Bank of England are likely priced into GBP/USD by now, but as we saw with last week’s ECB monetary policy statement, expectations can sometimes be off from reality and the reaction may surprise as well.
In terms of price action, GBP/USD has been in a steady uptrend since the beginning of September, forming a tight channel higher in what has pretty much been a two handle move in two weeks. That picture is highly likely to change though with the upcoming events for both currencies.
After reading up on the upcoming events and you’re still a bull on GBP/USD, then be on the lookout for some combination of a bigger than expected cut, expectations of future cuts in 2019, and/or a dovish dot plot/statement from Fed Chair Powell later today. One or any of the above would be a surprise and likely hit the Greenback in the short-term, and if the BOE surprises with positive rhetoric, then the bottom of that rising channel may hold to present traders with a short-term buying opportunity.
If you’re a bear on the pair, then a lack of all of the Fed statement scenarios mentioned above could draw in a relief rally for the Greenback, and in this scenario if the market is able to break below the rising channel, that’s likely a strong signal for momentum players to start jumping in. And any dovish rhetoric or surprise rate cut scenario from the Bank of England later likely turns a break into a swing move lower that potentially returns Cable back to its longer-term downtrend.
