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
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
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
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.
