Home Forex Markets Sterling outlook: UK public sector bonds hit fourth on record in October!Sterling bears gain

Sterling outlook: UK public sector bonds hit fourth on record in October!Sterling bears gain

by WOOWinvest
0 comment
Sterling outlook: UK public sector bonds hit fourth on record in October!Sterling bears gain

UK public sector bonds remain high; Fed officials will speak later in the day; the symmetrical triangle pattern on the GBP/USD daily chart currently has the potential to break through.

GBP/USD Fundamental Background

Spending by the UK public sector (see economic calendar below) outstripped revenues in October, pushing UK borrowing to the fourth highest level on record in October. The natural economic response behind rising debt levels is to raise interest rates to compensate investors for the risk of default. So, given the traditional positive correlation between interest rates and the degree of currency strength, the immediate reaction for GBP is to move slightly higher. That said, additional aggressive rate hikes are not sustainable for the UK economy given recession fears and already elevated interest rates.

The speeches of Fed officials in the early hours of Wednesday morning will be the focus of the market, the most aggressive of which may be Bullard. That’s when Bullard will likely maintain the hawkish rhetoric he’s been making for the past week or so. Given ongoing concerns about UK public finances, this could prompt GBP/USD to weaken further.

GBP/USD Economic Calendar

Chart source: DailyFX Economic Calendar

technical analysis

GBP/USD daily chart

Sterling outlook: UK public sector bonds hit fourth on record in October!Sterling bears gain

Chart source: IG, drawn by Warren Venketas

GBP/USD daily has been trading inside a symmetrical triangle formation and is now looking to break out in the short term. Fundamentals show that if the exchange rate falls below the triangle support, it is expected to fall to a shock low of 1.1738 or even lower in the future. However, the underlying symmetrical triangle pattern may also be invalidated if the price breaks and closes above the overhead resistance.

Key Resistance Levels:

Key support levels:

IG Client Sentiment: Bearish

IGCS client sentiment data shows that retail traders are currently net short GBP/USD; 54% of traders are net long at the time of writing. Retail sentiment is generally considered to be a contrarian indicator, but given recent changes in long and short positioning, we believe GBP/USD is biased towards the downside in the short term. (Written by Warren Venketas and translated by Ashley)

The content on this web page is general market commentary only and may not constitute investment advice of any kind (tax, legal, accounting). This article does not constitute a direct investment invitation or recommendation for specific financial products. The content is for reference only. Readers should not rely on the information herein, nor should their actions or omissions be relied upon. We are not responsible for the results of any person’s actions or omissions based on this article. We make no warranties as to the accuracy of the content or suitability of the information provided. This article is not intended to be disseminated within the territory of the People’s Republic of China (excluding Hong Kong, Macau and Taiwan for that matter), except as permitted by the applicable laws of the People’s Republic of China.

Copyright statement: Unless it is for browsing the information on this website, or in accordance with the applicable laws or the terms and conditions, without our specific written permission, no one may copy, usurp, upload, link, or publicly demonstrate to a third party in any way , distribute or transmit any information or content on this website. For unauthorized reprinting of infringements, we reserve the right to further pursue the legal responsibility of the relevant actors. If you have business cooperation needs such as marketing, resource exchange, etc., please contact us.

element inside the element. This is probably not what you meant to do! Load your application’s JavaScript bundle inside the element instead.

You may also like

Leave a Comment

Our Mission is to help you make better trading decisions by providing actionable investing content, comprehensive tools, educational resources and assist you in making more money in the stock market.

Latest News


Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

@2022 – All Right Reserved. Designed and Developed by WOOW Invest

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy