The pound is showing limited movement on Wednesday, but this could quickly change, as nervous markets monitor the U.S.-Iran showdown
GBP/USD has posted slight gains on Wednesday, erasing much of the losses seen in the Tuesday session. Currently, the pair is trading at 1.3154, up 0.26% on the day.
The U.S. drone attack which killed an Iranian general last week has shaken up the markets, and the pound has been marked by swings in both directions this week. The currency may have trouble finding its footing this week, as nervous investors follow developments in the Middle East. Given the extremely tense situation, I would counsel caution on the part of traders, as the markets remain unsettled. Iran attacked several military bases in Iraq on Wednesday, and a response from the U.S. could further unnerve investors and boost the safe-haven U.S. dollar.
The 1.3150 line remains relevant this week. Currently, this line is under pressure in support and could be tested during the day. This is followed by 1.3050. Below, there is support at 1.30, which has psychological significance. On the upside, we find resistance at 1.3220, followed by the round number of 1.3300.
USD/CNY continues to lose ground this week. Currently, the pair is trading at 6.9374, down 0.10% on the day. On Tuesday, the yuan touched a 5-month high against the dollar. There are no Chinese events on the schedule. On Thursday, China releases CPI, which could trigger stronger movement from the pair.
AUD/USD has steadied on Wednesday, after falling 1.1% on Tuesday. This was the sharpest one-day decline since April. Currently, the pair is trading at 0.6882, up 0.32% on the day. There was good news from the construction industry, as Building Approvals jumped 11.8%, its sharpest gain since February.
NZD/USD has recorded gains on Wednesday, recovering the losses from a day earlier. Currently, NZD/USD is trading at 0.6670, up 0.46% on the day. The New Zealand dollar remains under pressure, as it has lost close to 1.0% since the start of the year.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
