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GBP/USD Consolidates Above 1.28 Handle Ahead of UK PMI Data

By:
Colin First
Published: Sep 5, 2018, 06:37 UTC

Brexit continues to go nowhere fast, but Carney set to steer the BOE to the end of his full tenure as investors await Service PMI data in UK market.

GBPUSD Wednesday

The Sterling is back after a dip-and-bounce on Monday and majority of Tuesday’s Asian session that saw the pair take a knee into 1.2809, but bullish pressure for the Sterling on the back of the Bank of England’s (BoE) Carney maintaining the helm at the UK’s central bank coupled nicely with a bearish step-down in the USD, helping to lift the major pair off of the floor and mark in a potential support zone. As of writing this article, GBP/USD was trading near flat at 1.2853 down 0.01% on the day. Technically speaking, the corrective rally from the low of 1.2662 has ended and the bears are again gaining strength. The BoE’s Governor Mark Carney is set to maintain his tenure as the head of England’s central bank in a bid by the UK’s ruling regime to introduce a measure of good faith in markets as the ongoing and little-changed Brexit process still has little in the way of progress between the UK and the EU as Brexit day approaches in Q1 2019.

GBP Edged Up Ahead of UK PMI Update & Positive News on Brexit Talks Could Boost Sterling Further

The pair’s medium term outlook remains bearish on cues from British politics and Brexit woes, however any signs of agreement between UK & EU could give the pair a great upward push in favor of British Pound. On release front yesterday, GBP’s construction PMI was worse than expected which served as a trigger for yesterday’s decline while US macro data was positive. Today’s calendar will see release of Service PMI in UK’s market which is expected to have a positive data release while US market will see release of trade balance and red book data. On other side of Atlantic, US Greenback is gaining strength as each day passes as investors look out for news of President Trump’s tariff on Chinese goods worth $200b which is expected to be implemented within this week.

Trade war woes on multiple major economies such as Europe, Canada and threat of tariff on countries that deal with Iranian Crude Oil, are weighing down on major currencies boosting US Dollar. Despite a newfound interest by Pound bulls to find a way to keep the GBP/USD elevated, market pressures remain pinned firmly to the downside and when looking from a technical perspective, the short-term picture for the pair is still bearish, as, in the 4 hours chart, the price remains well below a bearish 20 SMA, which crossed below the 200 EMA, while technical indicators recovered from extreme oversold readings, but remain nearby. Expected support and resistance for the pair are at 1.2845, 1.2800, 1.2770 and 1.2890, 1.2920, 1.2955 respectively.

 

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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