GBPUSD, EURGBP, GBPCHF, GBPJPY, GBPCAD, GBPAUD and GBPNZD forecasts
In this article we are going to have a special focus on the GB Pound in the wake of the significant price action seen across financial markets since the global spread of the COVID-19 coronavirus in March and April.
Alongside the volatility exhibited throughout global stock markets, the Forex markets have seen notable price movements, with Sterling a particularly significant mover.
We will not only look at the Pound against the US Dollar, the Cable GBPUSD Forex rate, but will also focus on the important Euro versus Pound FX rate (EURGBP) and go on to analyse the Pound against a number of the other major global currencies (with our GBPCHF, GBPJPY, GBPCAD, GBPAUD and GBPNZD forecasts).
Global financial markets suffered a huge “risk off“ shock throughout March as the coronavirus pandemic spread from Asia and travelled around the globe, impacting Europe and the United States in particular.
Global share markets plunged lower, whilst safe havens assets such as Government bonds and Gold surged higher.
In the Forex space, most currencies plunged lower versus the US Dollar, except for the Japanese Yen and Swiss Franc, which rallied as traditional safe havens.
However, latter March saw a thirst for US Dollars globally as the greenback became the ultimate “flight to quality” currency.
April has seen a shift to a “risk on” theme, with stock indices rebounding globally, whilst the “risk currencies” the Australian, New Zealand and Canadian Dollars have rallied. The Pound has also attempted to recover.
Technical Analysis of the Pound
The GBPUSD Forex rate plunged lower in March with the global financial market panic as the US Dollar surged, but the Pound saw weakness against the Yen and Euro.
Although recovering against these currencies in April, with the shift back to a “risk on” theme, the Pound has weakened against the aforementioned “risk currencies”.
Let’s now take a look at the prospects for the UK currency, with our Pound forecasts for May.
A consolidation theme through much of April, after the surging recovery in latter March.
The underlying theme stays positive from this rally, whilst above 1.2163.
A more bullish intermediate-term view for May needs a push above 1.2647.
This can offer a move to 1.3000 and 1.3200 targets.
Below 1.2163 aims for 1.1885 retrace target and 1.1639 chart target.
A negative consolidation theme for the EURGBP Forex rate through much of April, after the plunging selloff in latter March.
The underlying theme stays negative from this selloff, whilst below peak at .8864.
A more bearish intermediate-term EURGBP forecast for May needs a push below .8671 and key .8621 1.2647.
This can offer a move to .8282 and .8000 targets.
Above .8864 aims for the .8987 and .9183 retrace targets.
A positive April consolidation phase to build on the robust, latter March recovery by GBPCHF.
The underlying tone remains positive from the March rally, whilst above 1.1778.
A more bullish intermediate-term view for May needs a push above chart/ retrace barriers at 1.2205/14.
This can offer a move to 1.2473 retrace and 1.2820 chart targets.
Below 1.1778 aims for 1.1532 retrace target and maybe the 1.1117 low.
An erratic consolidation environment throughout April for the GBPJPY Forex rate, after the strong recovery in latter March.
The main theme remains positive from this advance, whilst above 131.91.
A more bullish intermediate-term GBPJPY forecast for May needs a push above 135.75.
This can offer a move to 138.68 chart and 140.92 retrace targets.
Below 131.91 aims for 127.85 chart target.
Also, an erratic consolidation phase for GBPCAD through April, once more after the strong, latter March recovery.
Although erratic, the GBPCAD forecast remains positive from this March advance, whilst above 1.7181/72 chart/ retrace supports.
A more bullish intermediate-term view for May needs a push above 1.7697/7705, reinforced through 1.7798.
This can offer a move to the peak at 1.8053.
Below 1.7181/72 aims for the 1.6760 chart target.
A significant selloff for GBPAUD through April, undoing the March and 2020 recovery.
A spike higher through month-end and to start May, however, has revered the April down trend line, to shift the risks higher for the first half of April.
A more bullish intermediate-term view for May needs a push above the 1.9605 retrace level and reinforced through 1.9900.
This can offer a move towards the peak at 2.0595.
Below 1.8992 aims for the 1.8653 a d 1.8547 chart targets.
An erratic, wide consolidation range has dominated for GBPNZD over the past 2-months, really since mid-February, with a spike higher on 9th March.
A more bullish intermediate-term view for May needs a push above the 2.1039 to aims towards the 9th March spike high at 2.1817.
A more bearish intermediate-term view for May needs a push below the 1.9899 for 1.9418.
The Pound outlook for May: a summary of our Forex forecasts
In conclusion then, we see range environment for the Pound against most of these major currencies, but with risks skewed towards a strengthening of GBP versus; the US Dollar, Euro, Swiss Franc, Japanese Yen, Canadian and Australian Dollars, but with no strong view for GBPNZD.
BUY - rate is expected to increase, i.e. the first currency gains value against the second currency.
SELL - rate is expected to go down, i.e. the first currency is expected to lose value against the second currency.
GBP/CHF – Live and Historical Rates
The GBP/CHF pair is one in which both currencies are majors. The pair itself is not a major though and it quite obviously is not a commodity pair either. The chart above depicts the amount of Swiss Francs one will need to purchase a British Pound.
The world’s oldest currency still in circulation today, the GBP is much more for the UK than simple legal tender. It is a sort of symbol of sovereignty, and the British people have indeed stuck to it through the years of their country’s EU membership. Now, with Brexit looming on the horizon, the GBP looks like it’s here to stay, despite the hit it took in the wake of the referendum. The authority in control of the GBP is the Bank of England, located in London, the financial capital of the world. London is also a major forex trading hub.
Despite its forex popularity, the Swiss Franc is only the 7th most popular reserve currency in the world. Given the size of the country whose currency it is, that is however quite an impressive accomplishment. Switzerland’s economy is one of the strongest in the world. Powered by massive financial- and services sectors and backed by huge gold-reserves, the CHF’s status as a major currency is indeed fully justified. While the EU is indeed by far the biggest trading partner of the country, Switzerland has never even considered joining the EU or the Eurozone and that stance is not likely to change in the future.
Trading opportunity-wise, the GBP/CHF pair is indeed a very interesting one. Both countries have refused the EUR, yet both are major trading partners of the EU. The two economies are rather similarly built as well. The stability of the CHF and the volatility of the GBP create decent carry trading opportunities.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
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