Distressed GBP on the Backfoot Ahead of Next Week’s Key Data

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POUND STERLING ANALYSIS TALKING POINTS

  • U.S. NFP print retains pound depressed.
  • UK labor information and U.S. inflation direct the financial calendar subsequent week.
  • Long higher wick provides to GBP woes – weekly chart.

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GBP/USD FUNDAMENTAL FORECAST: BEARISH

The pound slipped on Friday after stronger than anticipated Non-Farm Payroll (NFP) information retracing most of its weekly good points. This has added stress on GBP contemplating the fragile state of UK fiscal coverage measures. While the UK authorities makes an attempt to stabilize bond markets after Chancellor Kwasi Kwarteng’s tax reduce announcement, sterling continues its bearish trajectory. The UK housing market is one other space of concern with declining costs prone to speed up as rates of interest rise leading to lesser demand.

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Get Your Free GBP Forecast

Next week places the UK labor market underneath the highlight which has proven a development of each unemployment and employment reducing month-on-month. Wage progress shall be a key metric to observe from the launch whereas the U.S. financial calendar will focus on inflation. Headline inflation (together with meals and vitality) is ready to fall largely as a result of a hunch in crude oil costs (September) with core projected to match 2022 highs in March.

GBP/USD ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

From a U.S. greenback perspective the ‘Fed pivot’ is unlikely after such stellar labor information so the elementary setting presently favors the dollar.

TECHNICAL ANALYSIS

GBP/USD WEEKLY CHART

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Chart ready by Warren Venketas, IG

Weekly GBP/USD worth motion is producing a protracted higher wick candle (yellow) which is historically linked with subsequent draw back – ought to the candle shut on this vogue. This echoes the elementary backdrop above and will carry the psychological 1.1000 into query quickly.

Introduction to Technical Analysis

Candlestick Patterns

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GBP/USD DAILY CHART

image3.png

Chart ready by Warren Venketas, IG

Dialing into the short-term every day chart, a affirmation shut beneath 1.1000 could spark additional promoting in the direction of the 1.0324 swing low. The Relative Strength Index (RSI) has now dipped beneath the midpoint 50 degree indicative of a rise in bearish momentum leaving little in the approach of bullish help from a technical standpoint.

Key resistance ranges:

  • 100-day EMA (yellow)
  • 1.1500/50-day EMA (blue)
  • 20-day EMA (purple)

Key help ranges:

MIXED IG CLIENT SENTIMENT

IG Client Sentiment Data (IGCS) reveals retail merchants are presently 57% LONG on GBP/USD (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment however as a result of current adjustments in lengthy and brief positioning, we arrive at a short-term cautious bias.

Contact and observeWarrenon Twitter:@WVenketas





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