Today we would look at the cable pair, the GBP/USD. It has been quite volatile lately, alternating between growth and losses every day, and so far this week seems to be more of the same.
The British pound naturally continues to be affected by the United Kingdom’s plans for leaving the European Union. While the euro welcomed the news of a postponement of Brexit until October 31 (unless a deal is agreed earlier than that), the pound remains shaky, since it is unclear whether Theresa May and Jeremy Corbyn will successfully agree on a bipartisan deal to pass through Parliament, or if the UK will be forced into preliminary general elections. Still, with a hard Brexit out of the picture, the pound has the potential to grow. This week analysts will be paying particular attention to the inflation reports out of the United Kingdom expected this Wednesday. Those will tell us more about whether the Bank of England might choose to hike interest rates to keep inflation at bay.
Meanwhile, the dollar is also struggling with its own problems. The progress in the trade negotiations between the United States and China, as well as the postponement of Brexit have increased risk appetite on the market, so the dollar is not today’s top investment option. This has left it vulnerable to fundamental results, as lately the reports coming out of the US have been mixed and the Federal Reserve has pointed out that the economy might be slowing down. Today we expect releases on the manufacturing and industrial production from the States, which will tell us more.
In terms of the daily chart, today we have a pivot point for the pair located at 1.3099, with the pair currently trading below it. The daily supports lie at 1.3079 and 1.3059, while the resistance levels are at 1.3119 and 1.3139. The indicators of technical analysis are somewhat mixed but lean towards a sell recommendation.
