Fundamental
Overview
The US Dollar got a bit of
a boost this week as Fed Chair Powell reiterated that 50 bps of easing by year end
remains the base case. The market’s probability for the Fed to cut by 50 bps in
November fell from 51% to 40% as a result.
On the data side, the ISM Manufacturing PMI released yesterday missed
expectations slightly. On the bright side, the new orders index improved a
little which might be an early signal of better times ahead. By contrast, the
employment component fell further into contraction but remained above the cycle
low.
On the GBP side, the UK PMIs last week were a touch softer than expected
but still solid compared to its peers. The market expects the BoE to deliver 36
bps of easing by year-end with a 25 bps cut in November priced at 85%
probability.
GBPUSD
Technical Analysis – Daily Timeframe
GBPUSD Daily
On the daily chart, we can
see that GBPUSD pulled back to the key support support zone around the 1.3265 level where we can also
find the 38.2% Fibonacci retracement level for confluence. This is where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs. The sellers, on the other hand, will want to see the price
breaking below the support and the major trendline to increase the bearish bets
into new lows.
GBPUSD Technical
Analysis – 4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, we can
see that the price broke below the minor upward trendline on Monday and extended the losses
as the bearish momentum picked up with the sellers piling in for a drop into the
support zone. There’s not much more we can add here as the buyers will just
look for a bounce around these levels, while the sellers will want to see the price
breaking below the major trendline.
GBPUSD Technical
Analysis – 1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we can
see that we have a downward minor trendline now defining the current bearish momentum
on this timeframe. The sellers will likely lean on it to position for a break
below the major trendline, while the buyers will want to see the price breaking
higher to increase the bullish bets into new highs. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US ADP report. Tomorrow, we get the latest US Jobless Claims
figures and the US ISM Services PMI. Finally, on Friday, we conclude the week
with the US NFP report.