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Pound sterling forecast: GBP / AUD, GBP / CAD, GBP / NZD rate

By on May 11, 2021 0

Outlook for the British Pound:

  • The performance of the pound against commodity currencies has been poor. While GBP / JPY is up over 8% year-to-date, GBP / AUD is up just over 1.7%, GBP / NZD is up less than + 0.2% and the GBP / CAD fell more than -1.75. %.
  • GBP / AUD remains tidy, while GBP / CAD and GBP / NZD continue to wind more and more into their triangular consolidations.
  • According to the IG Client Sentiment Index, the pound sterling has a mixed trade bias.

Is the GBP-cross commodity currency getting higher?

By most measurements, the pound sterling is one of the best performing currencies in the developed monetary space. And while this is especially true against low yielding currencies, it is not the case against growth sensitive or high beta currencies. While GBP / JPY is up over 8% year-to-date, GBP / AUD is up just over 1.7%, GBP / NZD is up less than + 0.2% and the GBP / CAD fell more than -1.75. %.

Following last weekend’s Scottish local elections which failed to generate enough implicit support for a second Scottish independence referendum In the present, the pound sterling has been able to free itself from a speculative albatross (another concern that is dissipating after Brexit, for now).

At the same time, with the global stock markets in a state of turmoil (or rather, asset reallocation), some of the high beta currencies have retreated as well; the news mix has been fertile for short-term gains in the commodity currency’s GBP crosses.

Read more: Central Bank Watch: Update on BOE and ECB Interest Rate Expectations

GBP / AUD RATE TECHNICAL ANALYSIS: DAILY CHART (March 2020 to May 2021) (CHART 1)

In the prior GBP-cross commodity currency update, it was noted that the GBP / AUD pair “looks set to stay in the range for the foreseeable future”. GBP / AUD has been in a range for several months now, only briefly breaking the February high (1.8112) in early April before falling immediately, while it has yet to descend below the February low ( 1.7689).

Overall, the pair continues to persist in a slightly descending parallel channel dating from late May 2020. The momentum is flat as evidenced by the lack of difference between the EMA envelope and the daily MACD hugging its signal line. For breakout or trend traders, better opportunities may still exist elsewhere.

TECHNICAL ANALYSIS OF THE GBP / CAD RATE: DAILY TABLE (March 2020 to May 2021) (CHART 2)

Pound sterling forecast: GBP / AUD, GBP / CAD, GBP / NZD rate

GBP / CAD has been the most volatile base currency in GBP crosses in recent days, not necessarily a surprise given the North American labor market data set at the end of last week. Brief dip below the ascending trendline of August 2019 and December 2020 lows hints at a false bearish breakout, ripe for a larger reversal after finding support near the 23.6% Fibonacci retracement of the range high / low 2020 at 1.6900.

However, it looks like the outlook for GBP / CAD may change, as a symmetrical triangle appears to be forming, cut against the swing lows of December 2020 and May 2021 and the highs of February and April 2021. It may be that if the GBP / CAD manages to overcome the 38.2% retracement (1.7120) and the daily 21-EMA, the path may be clear to trade higher towards the confluence of the 50% retracement (1.7297) and of the resistance of the triangle. in mid-June.

TECHNICAL ANALYSIS OF GBP / NZD RATE: DAILY TABLE (February 2020 to May 2021) (CHART 3)

Pound sterling forecast: GBP / AUD, GBP / CAD, GBP / NZD rate

It was previously noted that “if GBP / NZD were to stabilize above the February high of 1.9418, it would be an effort towards a significant reversal and establish a false bearish breakout below the ascending trendline of lowest of October 2008 and August 2015 ”. And although the pair reached the conditions for a reversal, these gains did not last; Now the GBP / NZD is once again below the ascending trendline of the lows of October 2008 and August 2015.

Looking back, it looks like the GBP / NZD is also consolidating into a symmetrical triangle. Resistance is carved against the highs of August 2020 and March 2021 and support comes from the swing lows of December 2020, January 2021 and May 2021. Now trading between 23.6% and 38.2% Fibonacci retracements of the 2020 high / low range, GBP / NZD rates may be destined to stay in the range for the foreseeable future.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

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