GBP/USD Upbeat in the Aftermath of Supportive UK Data
GBP/USD - H4
Following three straight negative weeks, the pair regains its poise, with the help of supportive economic releases and BoE commentary and extends its gains today.
On Monday, Bank of England (BoE) Governor said that he was "very uneasy" about inflation, during testimony to a parliamentary committee [1], while Employment data from the same day, were encouraging.
Yesterday, CPI Inflation for October in the UK accelerated to 4.2% y/y and to 3.4% y/y for the Core reading, strengthening the case for a rate hike by the BoE.
The cable takes advantage of the US Dollar's weakness as well, trying to take 1.3536 out, which represents the 38.2% Fibonacci of the October-November drop. This will allow it to challenge the next Fibonacci level at 1.3593-1.3600 that coincides with the EMA200, although we are cautious at this stage for a broader recovery that would bring 1.3699 into the spotlight.
The Pound is vulnerable to the EU-UK Irish border saga, while broader market sentiment appears cautious at this point and the US Dollar would stand to benefit from a worsening.
GBP/USD is susceptible to pullbacks, but a move below 1.3420-12 that will expose it to this month's 2021 lows (1.3552) will require a catalyst, although a rejection of 38.2 Fibonacci would create high risk for fresh lows.
UK Retail Sales, which are due on Friday, can affect the pair's next move.
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 25 May 2022 https://parliamentlive.tv/Event/Index/dffc6856-a4ef-49c9-b825-e52ac02f4562 |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.