GBPUSD Crumbles as The US Dollar Continues its Pre-FOMC Run

Sterling (GBP) Price, Chart and Analysis:

• US dollar rallies into the FOMC meeting.

• GBPUSD chart breaks down.

Q3 2019 GBP Forecast andTop Trading Opportunities

GBPUSD Back at March 2017 Lows as US Dollar Rallies

The great US dollar rally continues with the greenback approaching a fresh two-year+ high, despite markets fully expecting a 25-basis point interest rate cut at Wednesday‘s FOMC meeting. The US dollar continues to benefit from both the Euro and Sterling’s struggles, and the likelihood is that both will continue to slip lower. The German bond market continues to highlight the weakness in the Euro with yields now negative out to 20-years while the 30-year long bond offers just 19 basis points. The ECB is fully expected to cut rates at its September meeting and will likely re-start QE this year.

US Dollar Basket (December 2018 - July 29, 2019)

Sterling remains weak and is trading at a 2-year+ low against the SU dollar as the UK ratchets up expectations of leaving the EU with or without a deal on October 31. The British Pound may also underperform with this week‘s Bank of England ’Super Thursday expected to show a more dovish twist, further undermining GBP.

GBPUSD broke out of the symmetrical triangle we wrote about last week and may see further losses in the short-term. The technical set-up remains weak although the CCI indicator is at extreme levels (oversold) on the daily chart and this may temper the move lower. On a weekly chart there are two old higher lows at 1.2109 and 1.1983 before the October 2016 spike-low at 1.1800, all of which may tempt Sterling bears.

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GBPUSD Daily Price Chart (December 2018 – July 29, 2019)

Retail traders are 82.0% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. However recent daily and weekly positional changes give us a stronger bearish contrarian GBPUSD trading bias.

GBPUSD Weekly Price Chart (February 2016 – July 29, 2019)