Fundamental
Overview
The USD continues to be
backed by good economic data as we have also seen recently from the US PMIs last Friday and the US Consumer Confidence report this week. Although such
data keeps the interest rates expectations stable around two cuts by the end of
the year, it should also support the risk sentiment amid a pickup in growth.
This could be a headwind for the greenback.
The GBP, on the other hand,
has been under pressure since the BoE policy decision where the central bank dropped some
dovish signals and kept the door open for a rate
cut in August. This week the Pound has been under pressure mainly due to some
US Dollar strength.
It looks like the price
action is being influenced more by month-end, quarter-end and half year-end
flows though rather than something fundamental. We had also a key breakout in
USDJPY yesterday and flows there might have spilled over to other major pairs.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is testing once again the support
at 1.2635 as the buyers continue to step in around this level to position for a
rally into new highs with a better risk to reward setup. The sellers, on the
other hand, will want to see the price breaking lower to gain more conviction
and increase the bearish bets into the 1.25 handle next.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that the downside momentum seems to be slowing as the lower lows get
shallower. This might be a signal for a reversal although a break to the
downside could invalidate it.
The buyers will want to see
the price breaking above the downward trendline
to gain more conviction and increase the bullish bets into the 1.28 handle. The
sellers, on the other hand, might lean on the trendline to position for a break
below the support with a better risk to reward setup.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that we have the upper limit of the average daily range for today standing right around the
trendline. It’s unlikely that we will see a break to the upside today, but it
will be something to watch in the next days as quarter-end flows fade out.
Upcoming
Catalysts
Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US PCE report.