Basic overview
The US dollar remains under pressure amid aggressive market pricing in interest rate cuts and a better outlook for global growth in the wake of China’s recent massive easing measures. It’s now a battle between global growth, which is fueling risk appetite and weighing on the US currency, and aggressive interest rate pricing that could be scaled back if US data starts to rise.
On the sterling side, UK PMIs on Monday were softer than expected but still strong compared to their peers. Markets expect the Bank of England to ease monetary policy by 36 basis points by the end of the year, with a 25 basis point cut in November with a probability of 77%.
Technical Analysis of GBPUSD – Daily Time Frame
British pound against the dollar daily
On the daily chart, we can see that GBPUSD broke above the 1.34 handle but was unable to extend gains beyond this level. From a risk management perspective, buyers will have a better risk on reward setup around the 1.3265 support area where we can also find the 38.2% Fibonacci retracement level to converge. On the other hand, sellers will want to see the price break down to increase bearish bets to new lows.
Technical analysis of GBP/USD – 4-hour time frame
GBP/USD 4 hours
On the 4-hour chart, we can see that we have a trend line outlining the current bullish momentum. Buyers will likely rely on the trend line with specific risks below it in order to continue the uptrend. On the other hand, sellers will want to see the price fall to increase bearish bets on support.
Technical analysis of GBPUSD – 1 hour time frame
GBP/USD 1 hour
On the 1-hour chart, we can see that we may be forming an ascending triangle here with the 1.3430 level acting as resistance. Buyers will want to see the price break higher to increase bullish bets to new highs, while sellers will likely continue to defend resistance to reach new lows. The red lines mark the average daily range for the day.
Upcoming stimuli
Today, we conclude the week with the US Personal Consumption Expenditures report.