Wednesday Overview
On Wednesday, the GBP to USD slipped by 0.07% to wrap up the day at $1.27221. The GBP/USD rose to an early high of $1.27646 before sliding to a low of $1.26144. However, easing bets on a Fed rate hike supported a US session recovery.
Bears Target a Three-Day Losing Streak
There are no UK economic indicators for investors to consider today. The lack of UK economic indicators will leave the GBP to USD in the hands of market risk sentiment and bets on BoE interest rate hikes.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
UK private sector PMI numbers for August increased the chance of a UK economic recession. The latest numbers also eased bets on two BoE interest rate hikes before hitting the brakes.
US private sector PMI numbers provided the GBP/USD with late support on Wednesday. However, the weaker numbers will also raise concerns over the US economy, with recessionary fears likely to weigh on the GBP/USD.
No Bank of England Monetary Policy Committee Members are on the calendar to speak today. Following the August PMI numbers, investors should monitor the news wires for BoE member commentary. Dovish comments in response to the latest retail sales and PMI numbers would be bearish for the GBP/USD pair.
US Labor Market and Durable Goods Orders in Focus
US core durable goods orders and jobless claims are in focus today. Following the disappointment of the private sector PMIs, a spike in initial jobless claims would be bullish for the GBP/USD pairing.
Core durable goods orders will also influence as investors closely monitor the economic indicators. Another weak set of economic indicators will raise the chances of a US economic recession and reduce the expectation of a September Fed rate hike.
However, sentiment toward the latest economic indicators suggest a GBP/USD retreat. US service sector activity continued to expand while the UK services sector contracted for the first time since January.
The service sector contributes more than 70% to the UK and US economies, increasing GBP/USD sensitivity to the numbers.
Away from the numbers, investors should monitor Fed chatter from the Jackson Hole Symposium. The latest PMI numbers will likely give the Fed doves a stronger voice. Hawkish Fed commentary would catch investors by surprise and sink the GBP/USD.
GBP to USD Price Action
Looking at the 14-Daily RSI, 45.59 reflects a bearish sentiment. The RSI signals a return to sub-$1.2650 to bring the $1.2520 – $1.2440 support band into view. However, a move through the 50-day EMA would give the bull a run at the lower level of the $1.2785 – $1.2862 resistance band to target $1.2850.
4-Hourly Chart
Looking at the 4-Hourly Chart, the GBP to USD sits below the $1.2785 – $1.2862 resistance band. After the bearish Wednesday session, the GBP to USD remains below the 50-day and 200-day EMAs, sending bearish near and longer-term price signals.
The 14-4H RSI reading of 48.35 reflects bearish sentiment, with selling pressure outweighing buying pressure. Significantly, the RSI aligns with the EMAs, signaling a return to $1.2650. However, a GBP/USD move through the 50-day EMA would give the bulls a run at the 200-day EMA and the lower level of the $1.2785 – $1.2862 resistance band.
Chat now!
Add a Comment