Short opportunity for GBPUSDConsidering the economic problems and the o purchase of BOE, as well as the increase in the interest rates of FED, we predict a lower level for this currency pair.
BOE
GBP/USD - Guilt Crisis, Unemployment and GDP - UK in CrisisSummary. See video link below.
Finance Minister to speak in Parliament today. May cause the Pound to Rally, or fall further
Bank of England is currently intervening by purchasing 5 Billion Pounds of Guilts, which they have double to 10 Billion per day for this week.
UK is releasing GDP numbers tomorrow, this will cause significant volatility.
Overall I am short GBP/USD.
Watch this video link to understand why.
www.youtube.com
Will GDP shake up GBP/USD?GBP/USD is trading quietly for a second straight day. In the North European session, GBP/USD is trading at 1.1035, down 0.18%.
The pound has not posted a winning day since October 12th and has lost 400 points during that time. GBP/USD dropped below the symbolic 1.10 line earlier today, and a break below 1.10 will likely increase talk of the pound following the euro and dropping to parity with the dollar.
The UK labour market is one of the few bright spots in the economy, and today's employment report reaffirmed that the job market remains tight. Unemployment in the three months to August dipped to 3.5%, down from 3.6%, while average earnings jumped to 6.0%, up from 5.5% and ahead of the consensus of 5.9%. These rosy numbers are dampened by an inflation rate of 9.9%, which has badly hurt real UK incomes.
The strong job market bolsters the likelihood of the Bank of England will deliver some tough medicine at its November meeting, perhaps a super-size rate hike of 1.0%. The BoE was forced to intervene on an emergency basis after the mini-budget almost caused a bond market crash, and investors have circled October 14th, which is the expiry date of the BoE's gilt-buying intervention. There are concerns that if the BoE does not renew its bond-buying, the result could be another exodus from UK government bonds. On Wednesday, the UK releases GDP for August, which is expected at 0% MoM, down from 0.2% in July.
In the US, inflation will be in focus this week, with PPI data on Wednesday and CPI a day later. Headline inflation is expected to fall to 8.1% in September, down from 8.3% in August, but core CPI is expected to rise to 6.5%, up from 6.3%. Unless inflation surprises sharply to the downside, the release will not cause the Fed to rethink its hawkish policy.
GBP/USD faces resistance at 1.1085 and 1.1214
There is resistance at 1.0935 and 1.0776
Bank of England Emergency Bond PurchaseLast week, UK pension funds, which hold highly leveraged bond derivative positions, were facing a nearly $1 trillion loss as bond prices crashed and yields rose. The crash in the bond market has been underway for years, but the tipping point occurred when the UK prime minister pledged to cut taxes at a time when inflation is soaring into the double digits.
Cutting taxes worsens inflation because less taxes means consumers have more money to spend on inflating goods. Cutting taxes while inflation is high therefore risks worsening inflation or inducing hyperinflation. Fear of this caused the price of UK bonds to crash and yields to spike. (As many of you know well, bond prices move down when yields rise). This crash caused pension funds with highly leveraged bond positions to experience amplified losses, which caused these funds to need to put up more cash collateral on their losing positions. This could have caused a downward spiral because these funds may have had to sell bonds to raise more cash, which would have had a negative feedback loop that could have sent prices down further, amplifying losses more, and creating the need to raise even more cash collateral. The Bank of England had to make an emergency purchase of bonds.
However, by purchasing bonds, the Bank of England has taken an action that will now make inflation worse (there will be a lag effect). Whenever a central bank purchases bonds, it is adding liquidity to the system (when the central bank buys bonds this has the effect of increasing the money supply). Increasing the money supply when inflation is at a multi-decade high is super risky. At best it could risk inflation staying elevated for longer, at worst it could spiral into hyperinflation.
In the chart above, reproduced below, you can see that when priced in the British pound, crude oil prices are barely declining (as we would have expected from all the rate hikes). If anything, crude oil is looking poised to increase further.
The Bank of England, and other central banks, are trapped. Until they stop monetary easing (adding to the money supply) and tighten the money supply such that rates are higher than core inflation, inflation will continue to get worse. Yet, as we now see in the UK, central banks cannot tighten the money supply sufficiently to accomplish this without causing a financial crisis. The rapidity with which the Bank of England switched back on the money printer, despite double-digit inflation, has me convinced that central banks will choose the hyperinflation route.
In fact, hyperinflation is already happening in some countries. Argentina has hiked rates to 75% (not 75 bps, 75% or 7,500 bps) and yet inflation continues to spiral higher. There is actually no limit to how bad inflation can get. When people need to pay $100 trillion dollars for food, as in Zimbabwe in 2008, people usually stop believing that central bank fiat notes are valuable and the system collapses.
Look at the chart below. I did not log-adjust the chart so that you can see that hyperinflation is when commodity prices rise exponentially over time.
For the chart, I used the Invesco Commodity Index Tracking Fund (DBC) and priced it in Argentine pesos. I used cross plots on a smoothened moving average.
This level of hyperinflation always leads to some kind of crisis. Either interest rates must crush demand and cause economic decline, or hyperinflation eventually causes a monetary crisis whereby people stop using the currency altogether. Commodity hyperinflation also leads to political instability and the rise of fascist or communist dictators. Furthermore, when these crises occur on a global scale, they can precipitate conflict, and conflict in turn can worsen commodity shortages.
For those who have been thinking that inflation has peaked globally, there is no chart that I have seen which validates that conclusion. Indeed, as shown in the chart below, commodity prices continue to break record highs in some parts of the world. In most currencies, commodity prices appear to be bull flagging.
Compare the below two charts. One shows how commodity prices continue to spiral higher in Argentina, despite the central bank hiking rates all the way to 75%, compared to 2008, when commodity prices fell while the central bank raised interest rates to just 12%. This shows that we are dealing with a much more dangerous type of inflation.
I posted these figures to show just how bad inflation can get and the risks associated with monetary easing. Many people are believing the pig-in-a-python theory, where they think inflation is transitory and will improve when the massive COVID stimulus passes through the pipeline. However, what they fail to realize is that central banks have been putting an endless stream of pigs in the python for decades through monetary easing. Economies have become totally dependent on monetary easing and central banks are now trapped in needing to maintain it. Yet, if central banks continue monetary easing, inflation cannot come down. It just keeps spiraling higher so long as monetary easing continues, assuming commodity shortages also continue. Commodity shortages are deep-rooted and are due in part to war, deglobalization, aging and less productive populations, and climate change to name several factors. Monetary policy has little efficacy on these supply issues.
Sri Lanka was the canary in the coal mine. It was the first central government to fall due to commodity hyperinflation. And yet, even after a central government collapse, commodity prices in Sri Lanka are still high. The chart below shows that commodities appear to be bull-flagging, and poised to go higher.
Core inflation which is typically stable in the United States is now exploding to a 40-year high. If the Federal Reserve is to be successful at hiking rates to quell inflation, it must hike rates above the core inflation level. There is virtually no central bank with an interest rate higher than core inflation. Indeed, Japan continues to maintain negative interest rates. As I noted in a prior post, because negative interest rates incentivize the creation of money through credit, negative interest rates reflect limitless growth of the money supply.
However, as alluded to above, the Fed is trapped. It must hike rates above core inflation, but it also cannot hike rates above core inflation. Decades of monetary easing have left a highly leveraged economy totally reliant on low interest rates. Hiking rates as far as would be needed to quell inflation would likely lead to an economic depression. Pension funds are already under tremendous strain from the hiking and yet the charts show that the scope of tightening that will be necessary is not even in sight yet.
The best-case scenario is that commodity supplies improve and demand softens enough to stabilize rates but not so much that economies decline significantly. Even in this perfect mitigation scenario, stock market returns are likely to be muted for years to come.
GBPUSD; Pair Moves Into ResistanceGBPUSD Update
After such nice 5 subwave recovery on GBPUSD from 1.0532, it's time to zoom out a bit. Pair reaches potential temporary resistance up here, which will probably be broken next set-back. Or broken now and next set-back stops at that falling trendline.
GBPJPY H1 - Short SetupGBPJPY H1 - A mental week to say the least for the GBP and YEN, yet again. Some monster moves, 600 pips seen on single M5 and M15 candles, thankfully, healthy corrections seen towards the latter part of the week, which has balanced zones and made things measurable for us to follow going into this fresh week. Huge 10R trade potential down towards the previous area of S/R, we saw a handful of rejections from this 162-handle last week, a dip as much as 250 pips which was great. But minor in the grand scheme of things. Failing this rejection, we can simply look for break and retest play from that 162 handle.
GBPUSD MAPPING .3RD -7TH OCT 2022FX:GBPUSD when market opens on Monday , we would be able to know if the next wave drop is impulsive or corrective .However ,we still do expect a drop on gbpusd . nfp (non farm payroll ) and some other news would potentially give more data as to what to expect after the drop . COT data still shows gbp NET NEGATIVE on NON COMMERCIALS position.
in other words, its a BUYtoSELL trade
Can I tell you about: The BoE InterventionThe GBPUSD had been on a significant downtrend (see the downward channel) due to several factors:
- Strong USD, due to hawkish comments and aggressive interest rate policy path.
- Stick inflation in the UK, at record high levels despite the BoE being among the first central banks to hike rates.
- Uncertainty in the UK political environment following the ousting of PM Boris Johnson
- Concerns over the conflict at the Russian-Ukraine border
On the 23rd of September, the price broke strongly from the 1.1215 key support level following the announcement of tax cuts.
The tax cuts (biggest in 50 years), paired with subsidies for households and businesses to cope with a surge in energy prices, were aimed at boosting the flagging U.K. economy amid stubbornly high global inflation and growing economic gloom in Europe.
The market reaction was "worrying" as the government's new strategy relied on investors being willing to lend more to the UK. This saw the GBPUSD crash towards the 1.0360 support level.
On Thursday 28th of September, the BoE took emergency action by undertaking temporary and targeted purchases in the gilt market (buying long-dated UK government bonds) in an attempt to stabilise the market and to calm the turmoil in financial markets amid the collapse in the pound.
Following the intervention, the GBPUSD climbed steadily back towards the 1.1215 price area, reversing the decline for the week.
The question now would be; can the GBPUSD climb higher?
Technically, if the price breaks strongly above the 1.12 resistance area, the GBPUSD could climb towards the next resistance area of 1.1450, which is also the 127% fib expansion level.
Fundamentally, a sustained intervention from the BoE and recovery of the GBPUSD will depend on the HM Treasury to fully indemnify the purchases which are strictly time-limited and to be completed in the next two weeks.
GBPUSD Mid-Term AnalysisSep 27
This Analysis was done using my full Strategy which includes:
- Smart Money Concepts
- Multi Timeframe Liquidity and Market Structure
- Supply And Demand
- Auction Thoery
- Volume Analysis
- Footprint
- Market Profile
- Volume Profile
- etc
This expectation is a framework in order to look for a potential trading setup, I don't just execute based on this levels, I always wait for confirmations on lower timeframes
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GBP/USD slides as turmoil continuesThe roller-coaster continues for the British pound, which is down sharply today. In the European session, GBP/USD is trading at 1.0774, down 1.05%.
It has been a remarkable week for the British pound, which has exhibited sharp volatility since Friday, when Chancellor Kwarteng unveiled his mini-budget. The package included unfunded tax cuts, despite weak a weak economy and inflation hovering at 9.9%. The financial package was criticised at home as well as abroad; the International Monetary Fund and US Commerce Secretary Gina Raimondo also panned the plan. Former US Treasury Secretary Lawrence Summers had perhaps the most unkind cut of all, saying that the UK had the worst economic policy of any major country.
The British pound fell 3.6% on Friday and kept falling on Monday, hitting a record low of 1.0359. Bond prices tumbled and the turmoil became so acute that the Bank of England intervened on Wednesday in order to avoid a possible crash in the bond market. The BoE said that the crisis threatened financial stability and purchased just over one billion pounds in securities and will continue purchasing securities every day until October 14th. The bailout could hit over 60 billion pounds. The BoE's announcement sent bond prices higher and stabilized the bond market. The pound shot up 1.45% on Wednesday, but has reversed directions and is down sharply today.
Prime Minister Truss is under heavy pressure to shelve the financial plan which has caused chaos in the markets, but for now, the government is standing firm and says it won't back down. Truss and Kwarteng will have to face the music at the Conservative Party's annual conference next week, and it's likely we haven't heard the last word on the mini-budget which has triggered a major financial crisis.
GBP/USD is testing support at 1.0782. Next, there is support at 1.0644
There is resistance at 1.1052 and 1.1184
BOE, CPI and the FedWe're probably going to bounce from here (maybe muck around for the rest of the week and bounce next week higher); I think the BOE's QE decision is going to have people hoping that perhaps the Fed will do the same. The fact that a central bank can flinch and go the other way is a huge psychological change. This is somewhat of an exogenous event to the positive, to an already oversold market. Rally is going to continue (this is also area of the 200 weekly MA support).
Then ahead is the CPI, and i think this may come in lighter than expected and the markets may rally even higher; hoping that the Fed will back off the 75bp hike and ease up going in to the end of the year. Of course it can be a terrible double digit number, in which case the markets will tank; basically translates to 'what the Fed is doing is not working, and they're driving the economy to the ground anyway'.
But despite the data, and any easing of raising, since the Fed has pretty much said that they want to reach a certain target (despite what they say about being data dependent and whatnot), they're gonna plow ahead with the 75bp raise, then 50, as expected. I think this will be a big downer for the markets, and they will, despite fairly solid communication by the Fed, lose faith in the FED and find them to be stubborn and unwavering, leading the economy in to a recession in 2023.
Having said that, there's always exogenous events that can change the course of this, mostly to the downside, whether that be Ukraine, Taiwan, or a worsending housing/real estate market condition in China, etc.
GBP/USD jumpy after BoE interventionIt has been a volatile day for the pound. GBP/USD started the day with losses but has reversed directions and posted strong gains in the North American session. GBP/USD is trading at 1.0799, up 0.61%.
The new Truss government has started off on the left foot, sending the pound to a record low in the process. The trouble began on Friday, as Chancellor Kwarteng's mini-budget promised tax cuts, despite soaring inflation which is hovering around 10%. The mini-budget was widely panned and the pound sank like a stone on Friday, falling a stunning 3.6%. The pound lost another 1.5% on Monday and dropped to a record low of 1.0359.
The scathing criticism was not only domestic. The IMF has joined the chorus of boos and attacked the government's fiscal plans, going as far as calling on the UK to "re-evaluate" its tax cuts. Moody's warned that the plan could jeopardize the UK's credit rating. With the new government's credibility seriously undermined, it's no surprise that the pound is taking it on the chin.
In a dramatic move, the Bank of England has stepped in order to avoid a possible crash in the bond market. There had been speculation that the BoE might deliver an emergency rate hike in order to prop up confidence and the ailing pound. Instead, the BoE said it would unlimited purchases of government bonds of 20 years or longer. This pushed 30-year bonds sharply lower after they had climbed to 24-year high, and the pound has moved higher.
In the US, ten-year Treasury yields pushed above 4.00% earlier today, for the first time since 2008. The markets are showing a healthy respect for Fed hawkishness, even after inflation weakened in the past two inflation reports. There is some optimism that the current rate-hike cycle is reaching its end, with Fed member Evans stating that it will be appropriate to slow the pace of tightening at some point. For now, the US dollar has momentum, driven by an aggressive Fed and weak risk appetite due to worrisome developments in the Ukraine war, including the sabotage of the Nord Stream pipelines and Russia's plan to annex parts of Ukraine.
GBP/USD is testing resistance at 1.0742, followed by resistance at 1.1052
There is support at 1.0644 and 1.0431
EURGBP: Sterling weaker?EURGBP
Intraday - We look to Buy at 0.8835 (stop at 0.8740)
Although the bears are in control, the stalling negative momentum indicates a turnaround is possible. This is positive for sentiment and the uptrend has potential to return. The hourly chart technicals suggests further downside before the uptrend returns. Preferred trade is to buy on dips.
Our profit targets will be 0.9100 and 0.9200
Resistance: 0.9200 / 0.9340 / 0.9600
Support: 0.8825 / 0.8720 / 0.8630
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Pound weak and isolatedThe threat on the long term chart is unpleasant for GBP, 1.15xx and 1.05xx have been set up.
Just at the right moment, because BOE cannot now recapture the short-end of the rate curve with inflation still to reach his goal. To open things up, a simple test below 1.175x is all that is needed with Jackson to unlock the flow; a textbook swing ever since we saw restraint at 1.40xx.
If 1.175x is taken then 1.15xx is next to account, leaving 1.05xx wide open for this to collapse like a house of cards. After 1.15xx, I suspect the helplessness of buyers will be quite touching. This swing position is technically very similar to the previous GBP waterfalls we traded together with Brexit, Elections etc, a classical momentum move.
The prognosis for the Jackson flow seems quite good for sellers (not overwhelmingly so for those who are still sidelined). A test of the barricade at 1.19xx seems manageable, and where I am actively looking to add shorts, because for that the buyers would have been exhausted. Please note, invalidation only with closes above 1.20xx.
A master plan! Let's see how our counter attack move plays out.
ridethepig | GBP for the Yearly Close📌 @ridethepig GBP FX Commentary for the Yearly Close
Here I will start by presenting the following two diagrams:
The safety of the Pound turns out to be rather deceptive with a Johnson cabinet which is becoming increasingly weak. And once more, surprise surprise the reason no-deal brexit is being blocked after Biden blockades is a sufficient explanation of the 'rescue' attempt from globalism.
So the truth seems to come from the following facts;
A lot of Brexit depended on the Trump protection. Without it Johnson is hanging and must scramble back to the EU for security. We can argue about the MT and LT impacts of Brexit but the ST includes a loss of initial market access which is unfavourable for GBP anyway. The flow is clearly balanced towards the downside, despite the dollar becoming quite weak and resistance looks overprotected.
We will dig deeper and more frequently into the macro implications again in master praxis to track the inner flows. I will aim to close quite a few more of the original technical maps before we dissect the whys and hows of its worth.
Thanks as usual for keeping the feedback coming 👍 or 👎
GBP may have 'Truss' issues, but it can still move higherThe British pound suffered a flash crash yesterday as Asian traders reacted to the UK’s mini budget, which many suspect will exacerbate inflation and increase debt. Some are already calling for a vote of no confidence for PM Truss.
GBP/USD hit a record low before rebounding over 5% and GBP/JPY saw levels of volatility not seen since Brexit. And these levels of volatility did not go unnoticed by the BOE, who vowed they "will not hesitate to act" and raise rates to defend the pound if required. At one point yesterday money markets were pricing in a 200bp hike by November. And this has allowed GBP/USD to find some stability and shows the potential for another leg higher.
The 1-hour chart shows that prices pulled back to a 50% retracement level and the monthly S1 pivot point, just above 1.0600. Momentum is now turning higher in the Asian session and we suspect is is part of an ABC correction against yesterday's selloff.
• The initial target is around 1.0863 (38.2% Fib projection)
• Perhaps it can rise to 1.1000 is the BOE keep up their hawkish rhetoric
Cable; The Big Wedge PatternCable is breaking down hard after British finance minister Kwasi Kwarteng's announced tax cuts on energies. The plan is for households to save some money and to expand the supply side of the economy, but investors seem pessimistic about that, at least for the short-term period.
We see cable coming down hard, but price is moving into 1985 low with a potential throw-over formation with the current wedge pattern, so from a long-term perspective, the multiyear support may not be far away.
We will see what will the BoE response, but intervention or hawkish view can try to be supportive for the pound. Traders are already pricing 200bp of BOE hike by November this year.
Pound can't find its footingGBP/USD is down sharply today and has fallen below the 1.11 level for the first time since 1985. In the European session, GBP/USD is trading at 1.1125, down 1.16%.
The British pound can't seem to find any love. GBP/USD is looking dreadful, down 2.1% this week and 3.8% in September. The currency hasn't sunk to such levels since 1985 and the strong US dollar could extend the pound's current downtrend.
The markets are focused on today's mini-budget and UK releases. In the mini-budget, Chancellor Kwasi Kwarteng announced tax cuts and more spending. With no funding for the tax cuts and increased borrowing, gilt yields have jumped, but that has failed to boost the pound.
UK releases reiterated that the economy is in trouble, for anyone who needed reminding. GfK Consumer Confidence, which has been in a deep freeze, fell to -49, down from -44 and missing the forecast of -42 points. Manufacturing PMI rose to 48.5, up from 47.3 and above the estimate of 47.5, but remained in contraction territory for a second straight month. Services PMI slowed to 49.2, down from 50.9 and shy of the estimate of 50.0. With both manufacturing and services in decline, the outlook for the UK economy remains grim.
The Bank of England raised rates by 0.50% on Thursday. The pound did post some gains but couldn't hold on and closed the day almost unchanged. The move brings the cash rate to 2.25%, its highest since 2008. Still, it's fair to say that the 0.50% underwhelmed the markets, as there were some expectations for a more forceful hike of 0.75%. The BoE has been playing catch-up with inflation, which is running at 9.9% clip. The new Truss government has taken dramatic action to cap energy bills, which should help to curb soaring inflation. With the economy posting two consecutive quarters of negative growth and inflation still not under control, a recession appears unavoidable, which will likely add to the British pound's misery.
GBP/USD is testing support at 1.1117. Below, there is support at 1.1038
There is resistance at 1.1269 and 1.1342
BOE delivers 50bp hike, sterling steadyAs expected, the Bank of England hiked interest rates by 0.50%, bringing the cash rate to 2.25%. There was an outside chance that the BoE would press the rate pedal to the floor and deliver a 0.75% increase, but in the end, members decided unanimously on a less aggressive hike. The central bank is grappling with 9.9% inflation and a falling British pound, which means that more large hikes are likely coming. The British pound has edged higher and is trading at 1.1287.
With the rate decision out of the way, the markets will focus on UK releases, which are expected to be soft. Later today, GfK Consumer Confidence, which has been in a deep freeze, is projected to tick up to -42, up from -44. The week wraps up with Manufacturing and Services PMIs on Friday. Manufacturing PMI is expected to rise to 47.5, up from 47.3, while Services PMI is projected to slow to 50.0, down from 50.9.
The Federal Reserve delivered a third straight hike of 0.75% on Wednesday, raising the benchmark rate to 3.25%. This was largely expected, although there was a possibility that the hawkish Fed might raise rates by a full point. The Fed's decision was a "hawkish 0.75% hike", which gave the US dollar a significant boost, as GBP/USD plunged 1.01% on Wednesday and closed below the 1.13 line.
The Fed sent a clear message that it plans to remain aggressive, as inflation has proven much more persistent than anticipated. August inflation fell from 8.5% to 8.3%, but this was higher than the forecast of 8.1% and only reinforced the Fed's hawkish stance. Fed Chair Powell left the door wide open for yet another 0.75% increase in November, and unless inflation shows a dramatic drop, December is likely to bring a hike of 0.50% or 0.75%. With the benchmark rate now above the neutral rate of 2.50%, additional hikes will likely lead to a recession, but this is a price the Fed is willing to pay in order to curb red-hot inflation.
GBP/USD is testing resistance at 1.1269. Next, there is resistance at 1.1384
There is support at 1.1144 and 1.1061
GBPCHF: SNB and BOE week, will CHF outperform GBP?Hey traders, in today's trading session we are monitoring GBPCHF for a selling opportunity around 1.10300 zone, once we will receive any bearish confirmation the trade will be executed.
Trade safe, Joe.
GBP/USD steady after solid UK job dataGBP/USD is in positive territory today. In the European session, the pound is trading at 1.1731, up 0.42%. GBP/USD continues to take advantage of US dollar weakness and has gained 240 points since Thursday.
Inflation has hit a staggering 10.1% and the Bank of England is projecting that inflation may not peak until 13%, with some analysts predicting an even higher peak. The manufacturing, services and construction sectors are either in contraction or stagnation and the country is going through a major change, with a new prime minister and a new monarch. The UK has phased out energy imports from the UK, but the weak EU economy is taking a toll on the UK, as the two are close trading partners.
The UK labour market remains robust, one of the few bright lights in a grim economic landscape. Unemployment has fallen to 3.5%, a 50-year low, but wage growth in the three months to July rose 5.5% YoY, up from 5.2%. Employment rose by 40 thousand, down from 160 thousand prior and well below the forecast of 128 thousand.
For the Bank of England, the job numbers actually increase the odds of a supersize 75 basis point hike next week, as wage growth continues to rise and the labour market continues to tighten. The BoE, which has failed to show until now that it can curb spiralling inflation, may regain some credibility with a 75bp move.
All eyes are on the US inflation report, which will be released later today. The markets could be treated to mixed results - headline inflation is expected to drop to 8.1% (8.5% prior), while core CPI is forecast to rise to 6.1% (5.9% prior). With the Fed intent on remaining aggressive in order to tame inflation, the markets have priced in a 75bp increase at the September 21st meeting. The inflation release should be treated as a market-mover for the US dollar and has additional importance as it is the final key release before the Fed meeting.
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GBP/USD faces resistance at 1.1790. Above, there is resistance at 1.1931
There is support at 1.1689 and 1.1548
GBPUSD Can Rise As M Pattern Has CompletedTraders, GBPUSD can rise as an FCP M pattern has been completed. However this may not be able to push the price too high as the DXY is still rising and strong. So if you are looking for a smaller bounce then look for a confirmation on this GBPUSD pair and take the entry.
On the chart there are 2 arrows which point at the approximate profit targets. Take one step at a time and manage the risk.
Rules:
1. Never trade too much
2. Never trade without a confirmation
3. Never rely on signals, do your own analysis and research too
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Take care and trade well
-Vik
____________________________________________________
📌 DISCLAIMER
The content on this analysis is subject to change at any time without notice, and is provided for the sole purpose of education only.
Not a financial advice or signal. Please make your own independent investment decisions.
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Pound recovers losses after jobs reportThe British pound remains under pressure. In the North American session, GBP/USD is trading at 1.2055, unchanged the day. The pound fell as low as 1.2007 in the Asian session, just above the symbolic 1.20 line.
The economic outlook in the UK is grim and today's employment report didn't bring any cheer. Unemployment claims continue to fall and the labour market remains strong, but wage growth indicates trouble. Wages dropped to 5.1% in June, down from 6.4% in May. However, real wages (adjusted for inflation) actually fell by 3% in Q2 on an annualized basis, a new record. The cost of living is thus increasing at an even faster rate and is far outpacing wage growth.
The headline wage growth reading of 5.1%, which is not adjusted for inflation, may have fallen, but still remains high and will likely force the BoE to continue hiking aggressively. The BoE has forecast that inflation will hit a staggering 13% this year, and the last thing it needs to contend with is a wage-price spiral, which could entrench inflation.
The markets won't have much time to dwell on the employment numbers, with the inflation report being released on Wednesday. Headline CPI is expected to accelerate to 9.8% in July, up from 9.4% in June. If inflation pushes higher than the estimate, it could be a nasty day for the pound.
The Federal Reserve continues to send out the message that its rate hikes are far from over as the battle against inflation will continue for some time yet. The markets expect the Fed to raise rates to a peak in a range of 3.50% - 3.75%, well above the current benchmark rate of 2.50%. Despite this hawkish stance, the financial markets don't seem to be listening. US equity markets have been rising, while the US dollar, which should be benefitting from a hawkish Fed, is struggling. The lower-than-expected July inflation report of 8.5% raised risk sentiment and sent the dollar tumbling. If inflation resumes its upward trend in August, risk appetite could evaporate and the dollar might have the last laugh.
GBP/USD is testing support at 1.2030. Below, there is support at 1.1925
There is resistance at 1.2153 and 1.2258
