Cable continues to be very choppy, forming a bit of a shooting star during the week, but this still didn’t give any direction and we are just trading between the 1.30 level and the bottom, and the 1.3250 level in the top. This makes perfect sense considering everything that’s going on with Brexit and other political issues.
Over the weekend there were a bunch of people crying for a second referendum and in this day and age, I would not be surprised if there was one. The way the world see’s things is that if even if you lose all you need to do is a cry like a baby and the world gets soft and wants to give you a second chance.
I want to point out that we have broken through a major downtrend line and have since gone sideways which is quite typical for a potential trend change. If we can break above the 1.3250 level, that would be a very bullish sign and should send this market much higher. Otherwise, if we break down below the 1.30 level it would be very bearish.
Below we have Daily, 4HR and 1 HR time frames which paint’s a clear picture on how to trade the cable this week while there is uncertainty with #brexit. Once we have clarity on Brexit whether it is good or bad for the British public I would expect the bulls to come rushing back in to push the pair higher.
INFLUENTIAL INSTITUTIONS & PEOPLE FOR THE GBP/USD
The Pound VS Dollar can be seriously affected by news or the decisions taken by two main central banks:
The Bank of England
The Bank of England is the central bank of the United Kingdom. Established in 1694 and privately owned in the beginning, the Bank was nationalized in 1946 so now is completely owned by the UK government. BOE’s main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable. The bank is overseen by the Court, named used to refer the board of directors, and is accountable to Parliament and the public.BOE Official Website, on Twitter and Facebook
The European Central Bank (ECB)
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Mario Draghi, member of the Executive Board, is also the President of this organism.ECB Official Website, on Twitter and YouTube
The GBP/USD (or Pound Dollar) currency pair belongs to the group of ‘Majors’, a way to mention the most important pairs in the world. The pair is also called ‘The Cable’, referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term originated in the mid-19th century, which makes it one of the oldest currency pairs.
Pound Dollar represents two economies: British and American (from the United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, this pair has been suffering some turbulence due to risk related to the abandonment process from the European Union.