Why is the GBPUSD So Volatile?

When you trade the GBPUSD pair, timing is everything. When the two currencies are at the intersection of the American and European markets, they tend to be more volatile. However, this is not always the case. Keeping these factors in mind will help you make better trades. Let's look at the reasons why the pair is volatile and how to make the most out of it. Listed below are some of the most common reasons.

Economic growth

The UK economic growth was widely based last quarter, with personal consumption and business investments increasing 1.0%. The news sent the GBP/USD pair into a mildly positive mood. However, analysts predict a weaker UK economic performance this year due to the ongoing Ukraine crisis, which has pushed up the price of many commodities, including wheat and crude oil. The Bank of England is wary of stagflation, a state of prolonged economic growth followed by a decline in the value of currency.

Inflation

The government's latest rise in the inflation forecast could signal a tightening of monetary policy. It could also reinforce the idea that inflation is temporary. However, the Chancellor's approval rating isn't the best and he could be pressured to make popular measures that would curb inflation. Meanwhile, the Chancellor's reluctance to raise interest rates is largely due to popular pressure to cut energy bills and reduce fuel taxes. Moreover, Sunak's opposition to these measures has heightened fears of inflation. Despite the growing concerns, basic economics demonstrates that more currency is available, the price level increases.

The latest inflation report from the United Kingdom shows that UK inflation increased to 3.3% in May, the highest level since records began. In a letter to Chancellor Darling, BoE Governor King warned that the inflation figure was unlikely to fall below the 4% level. He also indicated that interest rates would likely need to rise further to meet the 2% target. That could negatively impact GBP/USD. However, in the UK, inflation was only 0.1% in July, which is still a very low level.

The Bank of England's inflation statistics also provide a strong basis for predicting whether the Bank of England will increase interest rates in 2017. The Bank of England's rate-setting committee is expected to keep the current monetary policy in place into 2017, so an upward revision in this indicator could spur a greater rebound in the pound-dollar. However, there are no other major events scheduled for Tuesday. Instead, traders should focus on key US releases on Wednesday, including Retail Sales and the Producer Price Index.

Monetary policy

Today's UK economic calendar is quiet, so monetary policy will be the focus. LC-MA Forum member Catherine Mann is scheduled to speak, while Bank of England Chief Economist Huw Pill speaks at Sheffield Hallam University. Their comments will likely affect the GPB/USD pair. Traders should keep their eyes on the UK economic calendar for further clues on how the BoE intends to raise interest rates.

This week's interest rate hike is the biggest news of the week, with the pair holding on to gains from the previous session. A weaker USD is helping to support this rally, as the largest train strike in 30 years gets underway. 40,000 workers across 13 train operators are striking for three days. At the same time, inflation worries are intensifying in the UK, as a YouGov poll shows that Britons are more pessimistic than any other country in the world. Traders should be wary of a 10% hike in interest rates.

Trading range

The GBPUSD has declined this morning, but failed to break through its R3 Camarilla pivot. It then traded through a 46-pip trading range back to the S3 pivot at 1.5149, indicating a temporary stall in the downtrend. Further declines would most likely mean that the currency pair will close lower for the seventh time in the last eight trading sessions. Here are some important factors to consider when interpreting a GBPUSD trading range.

A narrow range breakout setup typically consists of a spinning top or doji bar. These small bodies reflect the tight range. A breakout above or below the upper wick signifies a buy or sell signal. A spinning top bar, for example, had a low at 1.5987 and a high at 1.6099. The next bar, however, had a much wider range and breached the high of the spinning top bar.

Many successful trading strategies for the GBP/USD pair depend on the current market action and the trader's psychology. For instance, a range trader can capitalize on a breakout in the currency pair, as the GBP/USD is known to move strongly after a breakout. Another type of trader focuses on news reports and volatility after important announcements. A short-term trading range is also a viable option for range traders.

Moving averages

There are different types of moving averages for analyzing price trends. Whether you are looking to trade the forex market for profit or to minimize your losses, you can use moving averages. These indicators work by taking the average of previous prices and dividing them by the current price. The longer the time period, the smoother the moving average. If you want to analyze a particular currency pair, you can calculate its moving average on any time frame.

Traders should monitor for the period when the four-period SMA crosses the 9-period SMA. It is a strong buy/sell signal if both moving averages converge. However, a strong buy/sell signal is not generated unless the four-period SMA crosses the 18-period SMA. Traders should watch for a long or short trade once the two moving averages form one thick line. A short-term trader should also monitor for waning momentum.

For investors, moving averages are particularly useful during an uptrend or a downward trend. The opposite is true in a sideways market. Moving averages provide conflicting signals, so traders must determine which signals are significant and which are not. Moving averages should never be used as a sole indicator. If you want to use moving averages as a tool to make trade decisions, consider using them in combination with other technical indicators.

Price action

The GBPUSD price action is one of the most prominent forex pairs. It has high liquidity in the markets and low spreads. Since the Brexit vote in 2016, the currency pair has entered a period of high volatility. Investors are trying to assess the price of GBP after it officially leaves the EU. This article will give you an overview of the most common types of GBPUSD price action. Listed below are a few examples of the most common patterns to look for when trading GBPUSD.

Trend trading strategies work well on any currency pair and GBPUSD is no exception. These strategies require confirmation on both lower and higher timeframes. Buying dips on retracements is one such strategy. If you are able to find such a signal, you can enter a trade at 1.5050 or higher, as long as you put your stop loss behind the resistance level. Alternatively, you can trade the retracement area, which is typically at the support level of the previous day's high.

Another useful tool for evaluating the price action of GBPUSD is the Volatility Markets Market Speedometer. The Volatility Markets Market Speedometer provides statistical insights about price movements. It helps you identify trends and reversals. This indicator provides data for the last 21 days. The GBPUSD price grew in value 10 days and declined on 11 days, resulting in a -3.2087% return on investment.

GBPUSD News - How to Trade the GBPUSD

Forex traders track GBPUSD news to determine when to buy or sell. It's the currency pair representing the value of British Pounds in US dollars. The rate of the GBPUSD fluctuates with changes in both the UK and US economies, as well as in monetary policy. Listed below are some recent news and forecasts for the GBPUSD. Keep reading to learn how to trade the GBPUSD. Also check out our Political events section for more details.

Forecast for 2022

The Pound Dollar GBPUSD Forecast for 2022 is an accurate prediction of the currency's future course. This currency pair is expected to rise to a high of 1.90 US Dollars by the end of the year. The forecast also includes an updated target price, which will be based on a weighted average. In addition, this forecast also takes into account the risk factor of global economic slowdown.

The global economy has been on an upswing since the coronavirus outbreak in March-April 2020. The US has led the way as inflation has risen. US headline CPI (CPI) is at 5.1% and core CPI (CPI) is at 4% until November 2021. The Bank of England has already tightened policy by increasing interest rates by 0.10% and the FED will follow suit in December 2022.

The British pound has weakened since its recent peak. British business growth in June was better than expected, according to the latest data. The dollar index, on the other hand, has broken through the 105 neighborhood and closed at its highest level since December 2002. The Black Whale exchange rate is expected to be around 00438 - 00797 USD in 2023. In 2022, the pound will likely reach a high of 0999 USD.

According to the latest market reports, the GBP/USD exchange rate is likely to remain stable until the end of next year. However, in the following years, it is expected to rise to a high of 1.36 US Dollars by the end of 2022. In addition to that, a new forecast from Wallet Investor suggests that the GBP/USD pair could fall to 0.923 Pounds by the end of next year. Moreover, Citibank believes that tensions in the Brexit negotiations will deteriorate further next year. Therefore, Citibank expects the GBP/USD to fall to 1.29 within six to 12 months.

The GBP/AUD currency pair is expected to continue consolidating in 2022, which indicates further weakening against the Australian dollar. However, despite the aforementioned dynamics, the Australian dollar will continue to lose momentum against the British pound once the Bank of England increases interest rates. It is important to keep in mind that analysts' forecasts can be wrong. Therefore, a GBP/AUD forecast for 2022 should be based on the current data available.

Political events

In the recent past, political events involving the UK and the US sway the value of the GBP/USD. In particular, the Brexit referendum caused a sharp drop in the value of the pound. Even though the UK and US are far apart, British politics continues to drive alterations in the GBP/USD pair. Additionally, the US election cycle and tax policy will also have an impact on the value of the USD.

Politics will continue to influence the GBP/USD in the days ahead. The leadership of PM Johnson is in doubt, Brexit will be in the spotlight again, and the protocol for Northern Ireland will prove challenging. In addition, BoE hawkishness will likely support the pound. Despite these uncertainties, GBP/USD is currently trading flat on the day, near 1.3680. Cable is trading within a narrow range.

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