GBP Price Outlook: Pound Sterling Eyes PMIs & BoE Inflation

The Pound Sterling might drift into forex traders’ crosshairs later this week owing to potential for heightened currency volatility across GBP price action. This comes amid rising measures of implied volatility for the British Pound headed into the release of updated UK PMI data and an expected monetary policy update from the Bank of England.

BRITISH POUND IN FOCUS WITH UK PMI DATA & BOE MONETARY POLICY UPDATE ON DECK

(Click on image to enlarge)

GBP Price Chart UK Economic Calendar Pound Sterling Outlook

Chart Source: DailyFX Economic Calendar

Pound Sterling bulls have started to pull back from a multi-month high after staging a remarkable rally throughout July. In fact, the British Pound Currency Index, a basket of major currency pairs helping gauge broader GBP performance, posted a solid 5.5% gain last month, but GBP price action is down almost a full percentage point on balance since its July 31 swing high.

GBP PRICE OUTLOOK – POUND STERLING IMPLIED VOLATILITY TRADING RANGES (1-WEEK)

(Click on image to enlarge)

GBP Price Chart Pound Sterling Implied Volatility Trading Ranges GBPUSD GBPJPY EURGBP

Perhaps a recent rise in uncertainty surrounding this week’s release of leading UK economic data, like Markit PMIs, in addition to the expected BoE decision and inflation report, could explain the latest stretch of Pound Sterling sluggishness.

This is suggested by one-week implied volatility readings taken for GBP/USDGBP/JPY, and EUR/GBP as of last Friday’s close, which have churned higher over preceding sessions and now perched notably above their respective 20-day moving averages. Statistically speaking, an options-implied trading range of technical support and resistance is estimated to contain spot price action 68% of the time for the given duration.

Disclaimer: DailyFX, the free news and research website from IG, is one of the world's leading sources for news and analysis on the ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.