06 Jun, 2024

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British Pound (GBP) Latest – GBP/USD and EUR/GBP Technical Outlooks

• Cable set to re-test 1.2818 as the US dollar fades.
• EUR/GBP is within 25 pips of hitting levels last seen in August 2022.

The US dollar, Euro , and the Japanese Yen have all been in the spotlight over the past few weeks while Sterling has been sitting in the background, quietly moving higher. Today’s ECB policy meeting is expected to see the European Central Bank cut rates by 25 basis points, the US dollar remains under pressure as US Treasury yields move lower, while the Japanese Yen is heavily focused on BoJ and MoF rhetoric. The British Pound may soon come under pressure as the July 4th UK General Election comes into focus, but for now Sterling remains in a positive trend.

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Cable remains in an unbroken uptrend off the April 22nd low print at 1.2300 and is currently testing the 1.2800 level. The daily chart shows the pair comfortably above all three simple moving averages and posting a series of higher highs and higher lows. A break above 1.2818 would leave the March 8th 1.2894 high vulnerable, and that would see cable trading at levels last seen in late July 2023. Tomorrow’s US NFP data may slow any move higher in GBP/USD if the report shows that the US jobs market remains resilient, but the overall positive trend should remain in place.

GBP/USD Daily Price Chart

IG Retail data shows 34.77% of traders are net-long with the ratio of traders short to long at 1.88 to 1.The number of traders net-long is 10.34% lower than yesterday and 19.83% lower than last week, while the number of traders net-short is 8.63% higher than yesterday and 15.84% higher than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/ USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.

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EUR/GBP has been testing the 0.8500 area over the last two weeks and is less than 25 pips away from making a new 22-month low. The pair remain below all three moving averages and any move higher will find resistance around 0.8540 and 0.8550 difficult to break. The next move in EUR/GBP will be driven by commentary at today’s post-decision. ECB press conference .

EUR/GBP Daily Price Chart