Noor Trends News, Technical Analysis, Educational Tools and Recommendations
GBP/USD reached a weekly high of 1.2818, but dropped below 1.2700. US CPI remains above 3%, Core CPI remains 4%. UK GDP figures for Q2 release, US inflation data, reacted upwards.
US Treasury bond yields soared, leading to a comeback in the US Dollar (USD) at 1.2687. The GBP/USD pair reached a week’s high but trimmed gains as markets await UK data release. US Bureau of Labor Statistics reported a 3% YoY increase in July prices, while the Consumer Price Index rose by 3.2%.
The Federal Reserve remains data-dependent, with San Francisco Fed President Mary Daly stating it’s too early to declare victory. She supports July’s 25 bps rate hike and argues it’s far from rate cuts. The labor market shows signs of easing, but cautiously viewed. Initial Jobless Claims exceeded forecasts.
Money market futures reveal that after the data, traders drastically reduced their expectations that the Fed will increase rates once more. According to the CME FedWatch Tools, the likelihood of a rate hike in September is less than 10%, while the likelihood for the November meeting has decreased from 33.8% to 23.6% during the past month.
In light of the situation, the GBP/USD rose rapidly. However, market participants downplayed the move because the UK’s Gross Domestic Product (GDP) for the most recent quarter is likely to demonstrate the nation’s escape from the recessionary zone. The GBP/USD exchange rate could gain momentum and retest the 1.2800 level if the UK reports strong figures. Otherwise, traders would be looking at the 100-day EMA as the GBP/USD resumed its downward trend and extended its losses.
As traders faded the uptrend, the pair came under pressure to fall as a result of the pair’s inability to hold onto its gains above 1.2800. Additionally, the GBP/USD made a new weekly low, which allowed for a potential challenge of the daily low of 1.2620 from August 3.
The psychological level of 1.2600 will be reached after a breach of the latter, which would reveal the 100-day Exponential Moving Average (EMA) at 1.2605. On the other side, if the buyers retake 1.2700, the GBP/USD might retest 1.2800.
