Q2 GBP/USD, EUR/GBP, and GBP/JPY Technical OutlooksThe British Pound has started re-pricing against a range of currencies after the Bank of England’s shift in tone. Ahead of the March meeting, financial markets had penciled in the first UK rate in mid-Q3 and priced Sterling-pairs accordingly. The shift forward to the June MPC meeting has seen Sterling fall and this is likely to continue in the short-term. Further out, Sterling will likely stabilise against the US dollar and the Euro, while moves against the Japanese Yen will be dictated by the Bank of Japan.To understand the fundamental drivers of British Pound price action in the second quarter, download our complete British Pound guide from the link below
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GBP/USD Q2 Technical OutlookGBP/USD is back in a long-running consolidation zone that started at the beginning of November last year. The move higher to 1.2900 was quickly retraced and the BoE re-pricing sent cable back below 1.2600. A few important technical indicators to note on either side of 1.2600, are the 38.2% Fibonacci retracement at 1.2628 and the 200-day simple moving average, currently at 1.2591. Both need noting as GBP/USD tries to find a balance. If GBP/USD continues to move lower, further down big figure support is seen at 1.2500 ahead of the 50% Fib retracement at 1.2470. If we break below here, then sub-1.24 levels will come under pressure.Any move higher will find resistance at 1.2742 and the 1.2800 to 1.2825 area. The recent trading zone, highlighted on the chart, may see a short-term downside break but overall is likely to hold for the next two to three months.GBP/USD Daily Price ChartEUR/GBP Q2 Technical OutlookEUR/GBP is another pair that has been trading in a defined range over most of the first quarter. Support around 0.8500 has held firm and promoted a sharp rebound during its two tests, while the 0.8550 area has seen a variety of highs and lows printed on either side. As we write, multi-month resistance is being broken due to a current bout of Sterling weakness, and the 200-day sma at 0.8606 and a prior set of highs around 0.8620 are set to come under pressure soon. In the short term,a move above 0.8620 may well happen but with the CCI indicator showing the market in extremely overbought territory, a period of consolidation is likely. While the path of least resistance remains pointed higher, a move substantially higher – above 0.8700 -will struggle for traction. EUR/GBP looks set to trade higher in Q2, but not noticeably.EUR/GBP Daily Price ChartGBP/JPY Q2 Technical OutlookThe technical outlook for GBP/JPY is different from GBP/USD and EUR/GBP and potential moves may be more volatile in the weeks ahead. GBP/JPY has been in a strong uptrend since the start of 2023 with dual drivers of ongoing Yen weakness and bouts of Sterling strength. This trend may soon run out of steam as the BoE eyes lower rates in the coming months while the Bank of Japan has just raised interest rates, albeit by just 10 basis points. From a technical angle, GBP/JPY remains pointed higher with the pair continuing to make a series of higher lows and higher highs, while GBP/JPY also trades above all three simple moving averages. For GBP/JPY to turn negative, a break below the recent higher low at 188 is needed. This move would also take out the 20- and 50-day smas. A break lower would then leave the mid-186 area and 184 as the next targets.GBP/JPY Daily Price ChartTo see how changes in retail trade positioning can affect price action, download our complimentary guide.
of clients are net long.
of clients are net short.
Change in
Longs
Shorts
OI
Daily
10%
-18%
-1%
Weekly
21%
-31%
-2%
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