Today we would take a look at the GBP/USD currency pair, an instrument where we’ve seen quite a lot of commotion recently.
The Bank of England was forced to increase interest rates in the United Kingdom at the beginning of the month, due to the fact that inflation is above 3% and rising. This is largely to offset the damage caused by the premature decreasing of the rate last year, which was done to cushion the blow of the Brexit vote on the economy. However, the increase in interest rates did not help the British pound stabilize against major currencies.
Meanwhile, the dollar itself has been under fire due to the tax reform discussion in the US Senate. After Trump’s initial proposal was met with lukewarm interest, last week it was announced that the tax bill vote will be tabled until 2019, giving time to legislators to actually craft the reform. This had a negative impact on the dollar, which suffered against major currencies.
Today the pair will be influenced by several reports, which would hopefully help us determine the direction of this shaky pair. We expect the CPI and PPI from the UK, and all reports are supposed to show increases. In the United States, Fed Chief Janet Yellen will talk about the prospective interest rate hike in December and other key economic data will be released which may help boost the dollar.
In terms of the daily chart, the pair has a pivot point located at 1.3106 today. If the price remains below the pivot, we can expect a retreat to the daily supports at 1.3077 and 1.3033. If the rates of the GBP/USD manage to go above the pivot, then look for the resistances at 1.3150 and 1.3179. At the moment the pair is trading around 1.3100, slightly below the pivot, but still above the support levels. The indicators of technical analysis recommend a strong sell position.
