(Eren Sengezer – FXStreet)
– GBP/USD has recovered above 1.2100 in the European morning.
– British pound could hold its ground in case market mood improves.
– Wednesday’s US inflation data will be the next significant catalyst for the pair.
GBP/USD has gathered recovery momentum and climbed above 1.2100 during the European trading hours on Tuesday. The pair closes in on key resistance levels and it could find it difficult to attract buyers ahead of the US Consumer Price Index data on Wednesday.
In an interview with Reuters, Bank of England (BOE) Deputy Governor Dave Ramsden said that the BOE could continue to sell gilts even if a recession forces it to start lowering the policy rate. “I think by embarking on QT, that does at the margin impart some further monetary tightening, but it’s in the background compared to Bank Rate,” Ramsden told Reuters.
Although these comments seem to be helping the British pound stay resilient against the dollar, the currency could struggle to gather strength with the UK economy facing tough times ahead. Energy consultancy firm Cornwall Insight reported on Tuesday that energy bills in the UK are expected to rise at a stronger pace than initially forecast.
Later in the day, second-quarter Nonfarm Productivity and Unit Labor Costs from the US will be looked upon for fresh impetus. The IBD/TIPP Economic Optimism Index and the NFIB Business Optimism Index will also be featured in the US economic docket.
These data are unlikely to impact the probability of the 75 basis points Fed rate hike in September, which currently stands at 65%. However, in case safe-haven flows return on disappointing prints, safe-haven flows could provide a boost to the dollar and weigh on GBP/USD. At the time of press, US stock index futures were posting small daily gains, pointing to a cautious market mood.
GBP/USD Technical Analysis
1.2150 (50-period SMA on the four-hour chart) aligns as first resistance ahead of 1.2175 (Fibonacci 23.6% retracement of the latest uptrend). In case GBP/USD breaks above the latter, it could stretch higher toward 1.2200 (psychological level, static level).
On the downside, sellers could show interest if the pair falls back below 1.2100 (Fibonacci 38.2% retracement). In that case, additional losses toward 1.2070 (200-period SMA) and 1.2050 (Fibonacci 50% retracement) could be witnessed.
Trading short GBP/JPY? USD Index consolidating, gold (XAU/USD) at lower trend line [Video]
(Brad Alexander – FX Large Limited)
Is the big JPY reversal about to begin?
I’m Brad Alexander and in this week’s Market Blast Technicals let’s take a look at the USD Index, WTI (USOil), the DAX (DE40), Gold (XAUUSD) and GBPJPY.
As you know the Japanese Yen is incredibly weak right now due to the fundamental effects of Interest Rate and Bond Yield differentials and we have been waiting for a big reversal.
We see Rising Wedges (a bearish pattern) on almost all the JPY pairs so let’s keep an eye on these.
We want to trade short when the time is right, but against a weak currency, not a strong one.
Right now, GBP is displaying some weakness but this might be temporary due to the current political situation.
Also, before you make any technical decisions, remember that tomorrow’s US CPI report will be a huge event and will affect the FX and Equity markets.
Gold is still trending up and price action is following this lower trend line but I would wait for confirmation from another indicator and, of course, be careful with tomorrow’s CPI.
We see price action on WTI at the upper trend line and the Stochastic Oscillator about to turn lower.
Price action on the USD Index is consolidating into this symmetrical pennant with the same on the Stochastic Oscillator and MACD.
And, finally, we see a Rising Wedge on the DAX so we will keep an eye on this.