(Eren Sengezer – FXStreet)
– GBP/USD has gathered recovery momentum in the European morning.
– Pound needs to flip 1.1750 into support to stretch higher.
– Wall Street’s main indexes remain on track to open decisively higher.
After having touched its weakest level since March 2020 at 1.1647, GBP/USD recovered modestly and closed the day in negative territory slightly above 1.1700. With risk flows starting to dominate the market action early Tuesday, the pair has gathered bullish momentum and advanced toward 1.1750.
The UK’s FTSE 100 Index, however, erased a portion of the gains it registered after the opening bell and made it difficult for GBP/USD to continue to stretch higher. Nevertheless, US stock index futures are up between 0.6% and 1.1% on the day. In case Wall Street’s main indexes open the day decisively higher, the dollar could have a tough time finding demand in the second half of the day and allow GBP/USD to regain its traction.
The US economic docket will feature the Conference Board’s Consumer Confidence Index for August and JOLTS Job Openings data for July.
Following FOMC Chairman Jerome Powell’s appearance at the Jackson Hole Symposium last Friday, markets ramped up hawkish Fed bets with the CME Group’s FedWatch Tool pointing to a 70% probability of a 75 basis points rate hike in September. Ahead of Friday’s August jobs report, investors are unlikely to change their views on the Fed’s rate outlook based on Tuesday’s data. Hence, the risk perception could continue to drive the dollar’s valuation and GBP/USD’s action during the American trading hours.
GBP/USD Technical Analysis
GBP/USD was last seen trading at 1.1750, where the 20-period SMA on the four-hour chart is located. Meanwhile, the Relative Strength Index (RSI) indicator on the same chart climbed to 50, suggesting that sellers remain on the sidelines. Additionally, the pair holds above the descending regression channel coming from early August.
In case the pair manages to rise above 1.1750 and starts using that level as support, it could target 1.1800 (Fibonacci 23.6% retracement of the latest downtrend, 50-period SMA) and 1.1850 (static level).
On the downside, a failure to clear the 1.1750 hurdle could open the door for a slide toward 1.1700 (psychological level, static level) and 1.1650 (static level, end-point of the downtrend).
Trading short GBP/USD, Gold (XAU/USD) bearish on strong USD, new indices to trade [Video]
(Brad Alexander – FX Large Limited)
It looks like the Indices filled yesterday’s gaps.
I’m Brad Alexander and in this week’s Market Blast Technicals let’s take a look at GBPUSD, the S&P 500 (US500), the Nikkei (JP225), the Russell 2000 (RUS2000), and Gold (XAUUSD).
Yesterday we pointed out that Gold might be heading for the next key level at $1715.
Price action recovered a bit but we still have a bearish trend channel on the daily chart, the Stochastic Oscillator looks bearish, and the MACD has just fallen below 0.00.
Even the Parabolic SAR is looking bearish.
Yesterday as well, most global stock indices opened with weekend gaps to the downside but those gaps were filled like this one on the S&P 500.
We do, however, have bearish indications like this chart on the Nikkei where the Stochastic Oscillator is Overbought but we will wait for the crossover.
Speaking of indices, you can now trade the Russell 2000 on Valutrades MT4, which is an index of US companies with relatively small market capitalisations.
You can also trade the S&P 400 which you can find as US400 on MT4.
This is an index of medium-sized market capitalisations or MidCaps.
Looking at our analysis of Strong vs Weak currencies, we see that the USD is the strongest.
There are a few weak currencies right now but GBP seems to be lagging behind the most.
Therefore, looking at GBPUSD we see lots of bearish indications on the daily chart with room to move below.
However, watch the fundamentals as the UK expects to change prime ministers very soon.
Also, subscribe to our YouTube channel and register on the Valutrades website to get notifications on new content as it happens.
That’s all for now. Happy trading with Valutrades and we will see you next time.
CFDs and FX are leveraged products and your capital may be at risk.