Best analysis

It’s been a generally quiet Tuesday in global markets, with the US dollar regaining some of yesterday’s lost ground, WTI edging higher after hitting a new 4-month low under 47.00, and gold marking time below 1100. The only economic data release of note was the UK’s preliminary GDP reading for Q2, which showed as-expected 0.7% growth quarter-over-quarter.

While the headline GDP reading matched consensus, cable traders are taking a “glass half full” view of the report for a couple of reasons. First, the solid Q2 reading suggests that the Q1 slowdown was driven more by temporary factors than any structural issues with the UK economy; indeed, UK Chancellor of the Exchequer George Osborne noted that Britain’s economy was “motoring ahead” and that the government “must stay on the road [it’s] set out on.” In another feel-good, evening-news-headlinely development, the GDP per capita has now matched its pre-recession peak from Q1 2008. Looking ahead, this solid report strengthens the case for the BOE to hike interest rates early next year, or as some aggressive analysts have suggested, as soon as Q4 of this year.

Market Reaction

Not surprisingly, GBPUSD turned higher in the wake of today’s UK GDP report, bouncing from its intraday low near 1.5525 to trade briefly above 1.5600. From a broader perspective, rates have carved out a clear Morning Star* candlestick formation over the last few days. For the unitiated, this relatively rare 3-candle reversal pattern shows a shift from selling to buying pressure and often marks significant bottoms in the market.

The other technical indicators are a bit more ambiguous, with both the MACD and Slow Stochastics meandering around in neutral territory, but the recent price action still shows buying support around the 1.5500 level. To the topside, the next resistance area to watch is the 1-month high and 61.8% Fibonacci retracement in the 1.5680-1.5700 zone.

While there are no more top-tier data releases from the UK this week, today’s US Consumer Confidence report (14:00 GMT, 10:00 ET), tomorrow’s FOMC meeting and statement (18:00 GMT, 14:00 ET), and Thursday’s US Advance GDP report (12:30 GMT, 8:30 ET) could all serve as key event risks for GBPUSD moving forward.

* A Morning Star candle formation is relatively rare candlestick formation created by a long bearish candle, followed a small-bodied candle near the low of the first candle, and completed by a long-bodied bullish candle. It represents a transition from selling to buying pressure and foreshadows more strength to come.

GBPUSD

This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD consolidates weekly gains above 1.1150

EUR/USD consolidates weekly gains above 1.1150

EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.

EUR/USD News
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains. 

GBP/USD News
Gold extends rally to new record-high above $2,610

Gold extends rally to new record-high above $2,610

Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.

Gold News
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures