Fundamental
Overview
Yesterday, we got two
strong US data releases as the Jobless Claims and Retail Sales figures came out much better than
expected. The initial reaction was US Dollar bullish, but after a while the
market started to fade the move.
The reason is that the
risk-on sentiment is generally negative for the greenback as the market focuses
on positive global growth. Of course, the reasons to sell the USD are not that
strong and that’s why in the big picture the major currency pairs have been
mostly trading in a range for a year.
But in the short term, the
changes in sentiment are influencing the price action and the US Dollar
performance.
On the GBP side, this week
we got good labour
market data and a softer than expected UK
CPI report. Overall, it didn’t change much the picture as the market
continues to price in a 36% probability of a back-to-back cut in September.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD is breaking above the key resistance zone around the 1.29 handle. This
is where we can expect the buyers to increase the bullish bets into the 1.3043
level next. The sellers, on the other hand, will want to see the price dropping
back below the resistance to position for a drop into the 1.26 handle with a
defined risk above the resistance.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that if we were to see a pullback, the buyers will likely lean on the
upward trendline to position for new highs with a
better risk to reward setup. The sellers, on the other hand, will want to see
the price breaking below the trendline to increase the bearish bets into the
1.26 handle.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see more clearly the breakout with momentum picking up steam as more buyers
pile in. There’s not much else we can glean from this timeframe as the buyers
will look to buy the breakout, while the sellers will want to see the price
dropping back below the resistance to start positioning for a drop into the trendline.
The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment
survey.