GBPUSD: Forex Technical Analysis – UK growth forecast downgrade bearish for Pound

By IFCMarkets

UK growth forecast downgrade bearish for Pound

The International Monetary Fund downgraded its forecast for 2017 UK growth. Will the GBPUSD continue declining?

The International Monetary Fund downgraded its forecast for 2017 UK growth to 1.6% from 1.7%. The fund said it expects growth to slow to 1.5% in 2018. The IMF cited UK’s last year decision to leave the European Union the reason for slower growth prospect. Diminished UK economic growth prospect after Brexit is bearish for Pound. Today at 11:30 CET the final reading of GDP and the current account for third quarter will be released. No change in Q3 GDP is anticipated, while a narrowing of the current account deficit is expected. A better than expected reading will add to Pound upside risk.

On the daily chart the GBPUSD: D1 has been retracing following the rise to 2 month high in the end of September.

• The Parabolic indicator gives a buy signal.
• The Donchian channel signals downtrend, it is tilted down.
• The MACD indicator is above the signal line and the gap is narrowing, which is a bearish signal.
• The stochastic oscillator is rising but hasn’t reached the overbought zone.

We believe the bearish movement will continue after the price breaches below the lower Donchian boundary at 1.3301, confirmed also by fractal low. A price below that level can be used as an entry point for a pending order to sell. The stop loss can be placed above the fractal high at 1.3465. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.3465) without reaching the order (1.3301) we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Market Analysis provided by IFCMarkets