Forex Video Briefing (6/24) – GBP/USD, GBP/JPY, EUR/GBP

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[videojs mp4=”http://s3.amazonaws.com/fxcom-amazon-s3/2014/06/British-Pound-Slides-from-Dovish-BoE-Comments-.mp4″]

GBP/USD stalled around 1.7060 last week, which was the highest the pair has been since 2008. It retreated but was holding above 1.70 until the dovish comments today. You can see the reaction pulled the GBP/USD below 1.70. Price is testing the 200-hour SMA. Despite loosing some short-term momentum, evidenced by the RSI tagging 30, GBP/USD is still bullish outside of the near-term. Only a break below 1.6920 should open up a more significant bearish correction/consolidation scenario. Also, if price starts to find resistance around 1.70, we should also start to shift expectations toward a bearish correction. But if price pulls back above 1.7030, it should revive the bullish continuation mode.

GBP/JPY was retreating after rallying to 174.09 last week. The pair continued this bearish correction after the BoE report. The 172.75-173 area is consolidation support, and if price can hold above this area, the bearish outlook is shelved. However, a break below 172.70 exposes the 171.90 pivot to 172 psychological handle in the near-term. A hold above this support area, and a break back above 173.50 should signal bullish continuation, with the 2014-high waiting just above at 174.83.

EUR/GBP has been consoldiating since finding support at 0.7960 last week. It has since found resistance at 0.8025. The pair started this week trading in a tight range aroudn 0.7990. After the BoE report, traders boosted the EUR/GBP from this narrow consolidation to the resistance of the larger consolidation base. A break above 0.8025 exposes the 0.8060 resistance pivot. We should limit the bullish outlook seen in the 1H chart to this level for now because it would be going against a persistent bearish trend as you can see in the daily chart. If there is further evidence of bullish development like respecting the current consolidation range as support, then we can consider the 0.8150 pivot.