GBP/USD outlook: Recovery shows signs of stall ahead of BoE rate decision

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable dipped during early European trading on Wednesday, deflated by weak UK data (July Construction PMI fell to the lowest since 2020), although the price holds within the range that extends into third consecutive day (long-legged Doji candles point to strong near-term indecision).

Overall technical picture remains negative (daily MA’s are in bearish setup with the latest formation of 10/100 and 30/55DMA bear-crosses / 14-d momentum remains in negative territory) and supports scenario of recovery stall before larger bears regain full control.

Recent range top (1.3330, reinforced by falling 10DMA) should keep the upside protected and guard barriers at 1.3348 (100DMA) and 1.3375 (broken Fibo 38.2% of 1.2708/1.3788.

Violation of temporary support at 1.3248 (cracked Fibo 50%) to expose targets at 1.3141 (Aug 1 three-month low) and 1.3120 (Fibo 61.8%).

Markets await BOE’s rate decision (due on Thursday), with the central bank expected to cut rates to 4.00% from 4.25% that would add more pressure on sterling.

Res: 1.3330; 1.3348; 1.3375; 1.3397.
Sup: 1.3248; 1.3185; 1.3141; 1.3120.

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

1. R3 1.338
2. R2 1.3348
3. R1 1.3323
PP 1.3292
1. S1 1.3267
2. S2 1.3235
3. S3 1.3211

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.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.