GBPUSD Outlook: Pound falls on Brexit concerns and rising dollar ahead of Powell’s testimony
|Cable lost traction and fell back below 1.3200 handle after post-UK jobs data rally hit session high at 1.3268, but gains were short-lived and stalled again under strong offers at 1.3300 zone. UK average earnings came in line with expectations at 2.5% in May, but previous month’s release was revised higher (from 2.5% to 2.6%), giving positive signal and partially offsetting negative impact from weaker than expected jobless claims (7.8K in Jun vs 2.3K f/c) and employment change (137K vs 150K f/c) while unemployment rate remained unchanged at 4.2% in May. Overall soft UK jobs data offered little support to sterling, which accelerated lower on fresh dollar’s rise ahead of Fed Powell’s testimony, which is key event for the dollar on Tuesday. Fresh weakness moved below the cluster of daily MA’s supports (10;20;30) and cracked lower pivot at 1.3211 (20SMA) close below which would be negative signal.
Near-term bias turned lower as hourly techs weakened after recent fall, which retraced over 50% of the latest 1.3102/1.3292 upleg.
Extension below 1.3175 (Fibo 61.8% of 1.3102/1.3268) is needed to confirm reversal and risk return to last Friday’s spike low at 1.3102, loss of which would unmask key support at 1.3049 (28 June low). Additional pressure on pound comes from comments of BoE’s chief Carney who warned about big consequences on UK economy if Brexit transition deal, which is currently on agenda will not be ratified. All eyes are turned on Fed Chairman Powell’s testimony, which is expected to provide more clues about the US monetary policy outlook and signal fresh direction of the greenback.
Res: 1.3253; 1.3292; 1.3338; 1.3383
Sup: 1.3213; 1.3180; 1.3102; 1.3065
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