GBP/USD outlook: Cable falls sharply on political turmoil in UK

Slobodan Drvenica Windsor Brokers

GBP/USD

British pound fell across the board on Wednesday following fresh political storm in the UK, after finance minister Reeves’ budget plan was strongly hurt by a series of significant changes in welfare reform bill that undermined the position of the fin min Reeves, as well as PM Starmer, who gave his full support to the finance minister.

Fresh weakness (Cable was down almost 1% for the day) adds to reversal signal that is developing on daily chart, as today’s action was shaped in long bearish candle, after the pair has registered six consecutive daily gains.

Technical picture weakens on daily chart as south-heading 14-d momentum is cracking the centreline, in attempts to break into negative territory and bears pressure important support at 1.3579 (50% retracement of 1.3370/1.3788, reinforced by converged daily Tenkan/Kijun-sen) while situation on 4-hr and hourly charts shows that bears gained control.

Break of 1.3579 trigger to open way for further weakness and expose targets at 1.3530 (Fibo 61.8%) and 1.3500 (psychological) guarding more significant support at 1.3397 (top of ascending and thickening daily cloud).

Broken 200HMA (1.3642) offers solid resistance, along with 1.3674 (low of recent range).

Res: 1.3618; 1.3642; 1.3674; 1.3712.
Sup: 1.3530; 1.3500; 1.3469; 1.3397.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3874
2. R2 1.3831
3. R1 1.3789
PP 1.3746
1. S1 1.3704
2. S2 1.3661
3. S3 1.3619

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.