GBP/USD Forecast: Dead cat Brexit bounce ahead of Powell's power play

The GBP/USD is unable to take advantage of the USD breather.
Concerns of a no-deal Brexit weigh on the Pound.
The technical picture shows that upside momentum has disappeared.

Yohay Elam FXStreet

The GBP/USD is trading just above 1.2800. The US Dollar is taking a breather ahead of Fed Chair Jerome Powell's speech at Jackson Hole. However, cable is unable to take advantage of it and remains pressured.

The British government released a series of notices towards a no-deal Brexit on Thursday. UK Brexit Minister Dominic Raab said that he is optimistic about getting a "good deal". Nevertheless, there have been no reports about progress in the negotiations and the publication of the no-deal papers served as a reminder that crashing out is a plausible outcome.

In the US, data was not that great, with New Home Sales providing the second day of housing disappointments. However, the US Dollar advanced as trade talks between China and the US were inconclusive. The greenback moves higher on escalations in the trade wars.

The focus shifts back to the Federal Reserve as Chair Jerome Powell speaks in Jackson Hole at 14:00 GMT. While a September hike is priced in, the focus will be long-term trends and Powell can move markets.

See: Powell's Jackson Hole Speech: Three topics to watch out for beyond the September hike

Before Powell's public appearance, the US publishes the Durable Goods Orders for July, the first month of Q3. A slide is expected after significant increases beforehand.

See: US Durable Goods Orders preview: activity seen easing in July

GBP/USD Technical Analysis

GBP USD Forecast August 24 2018 technical chart

The GBP/USD has lost upwards momentum and the Relative Strength Index is flat.

Support awaits at the round 1.2800 level which supported the pair in recent hours. It is backed up by the 50 Simple Moving Average on the four-hour chart. Further down, 1.2760 held the pair down in mid-August and now serves as a support. Lower, 1.2730 was a stepping stone on the way up later in the month. The 2018 low of 1.12662 is next.

1.2940 was the peak seen in recent days. It is followed by the round number of 1.3000 and then by 1.3050 which worked in both directions before the recent fall.

More: GBP/USD at critical support, break or bounce? — Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.