GBP/USD, EUR/GBP – Prices, Charts, and Analysis
- The Queen’s speech is expected to focus on growth.
- GBP/USD looks indecisive.
- EUR/GBP building a bullish pennant set-up.
Today’s Queen’s Speech – to be delivered by Prince Charles – will highlight the government’s drive to boost economic growth amid fears that the UK economy will not only stagnate but also contract in the months ahead. The speech, which starts at 11.30 BST, is also expected to outline the government’s plans for changing a raft of Brexit regulations and boosting the countries’ energy stability by building more nuclear power stations. If, as reported, the UK government unilaterally breaks the Northern Ireland protocol, then a trade war with the European Union is a likely outcome and will weigh further on Sterling.
The latest BRC retail sales data showed sales decreasing by 1.7% on a y/y basis as consumers kept their hands in their pockets in April.
Chart via TradingEconomics.
For all market-moving economic data and events, refer to the DailyFX calendar
Cable is sitting at multi-month lows and looks set to remain at these lows in the short-term at least, with little reason for the Sterling to move higher. The economic backdrop – slowing growth and rampant inflation – will tie the Bank of England’s hands going forward with market rate hike expectations looking increasingly hawkish. The last four candles on the daily chart highlight the current weakness, and indecision, of Sterling, and this is set to continue in the days ahead.
GBP/USD Daily Price Chart May 10, 2022
Retail trader data show 81.06% of traders are net-long with the ratio of traders long to short at 4.28 to 1. The number of traders net-long is 5.15% lower than yesterday and 2.63% higher from last week, while the number of traders net-short is 5.17% higher than yesterday and 1.12% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.
EUR/GBP has turned from bearish to bullish over the past weeks with a long-running series of lower highs and lower lows broken convincingly. The daily chart shows a bullish pennant forming and if this pattern continues to play out, a break back to the 0.8670 zone and then 0.8721 is likely.
EUR/GBP Daily Price Chart – May 10, 2022
What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.