POUND STERLING TALKING POINTS
- UK Prime Minister race features traction.
- GBP crosses give attention to UK GDP late this week.
GBP/USD FUNDAMENTAL BACKDROP
This morning noticed pound sterling barely stronger in opposition to each the U.S. greenback and euro respectively. Much discuss has been across the British Conservative Party’s new chief and UK Prime Minister whereby each (Sunak and Truss) have hinted at some type of fiscal stimulus (tax cuts). Tax cuts are geared toward encouraging financial progress inside the UK and will add to already excessive inflationary pressures which in flip may consequence in additional rates of interest hikes from the Bank of England (BoE).
There is nothing of significance on the financial calendar (see beneath) in the present day whereas the remainder of the week has UK markets fixated on the GDP launch. The GDP concern is much more related than ever after final week’s BoE assertion round a possible recession in This autumn.
GBP/USD ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
TECHNICAL ANALYSIS
GBP/USD DAILY CHART
Chart ready by Warren Venketas, IG
Although sterling has appreciated in opposition to the greenback this morning, the harm from Friday’s U.S. NFP transfer has saved the pound depressed. I don’t count on a lot in phrases of value volatility on cable main as much as Wednesdays core inflation launch. Technical indicators don’t at present favor any specific directional bias which may indulge short-term buying and selling setups.
Key resistance ranges:
- 1.2400/100-day EMA (yellow)
- 50-day EMA (blue)
Key help ranges:
- 1.2080/20-day EMA (purple)
- 1.2000
EUR/GBP DAILY CHART
Chart ready by Warren Venketas, IG
The every day EUR/GBP chart above exhibits value motion persevering with to trade inside the growing downward sloping channel (blue) which may progress into bull flag kind transfer ought to bulls break above channel resistance. This being mentioned, a verify shut beneath the 200-day SMA (gray) and the resultant bearish crossover from the 50-day EMA (blue) and 100-day EMA (yellow) may even see subsequent help zones come into consideration – essentially, this is sensible ought to the upcoming Prime Minister make true on his/her guarantees outlined above.
Key resistance ranges:
Key help ranges:
MIXED IG CLIENT SENTIMENT
IG Client Sentiment Data (IGCS) exhibits retail merchants are at present LONG on GBP/USD, with 70% of merchants at present holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment nonetheless as a result of current adjustments in lengthy and brief positions we choose a short-term cautious bias.
Contact and observe Warren on Twitter: @WVenketas