UK wages rise sharply, GBP gives back some gains

The British pound managed to post some modest gains on Tuesday after data showed that average earnings increased 2.9% on the year excluding bonuses in July. The data beat estimates and the unemployment rate held steady at 4.0%.

The pound sterling was giving up the gains from Monday following Barnier’s comments about reaching a Brexit deal in the next four to six weeks. The GBP eased with lack of any follow up on the Brexit developments.

The German ZEW economic sentiment report showed the index improved to -10.6, missing estimates of a -13.5 decline.

The economic data for the day will start off with the industrial production numbers for the Eurozone. Economists polled expect industrial production to fall 0.5% on the month. This extends the previous month's decline of 0.7%.

The NY trading session will see the U.S. producer prices index coming out. PPI is forecast to rise 0.2% on the month after a flat print previously. Core PPI is expected to also rise 0.2%.

FOMC member, Brainard will be speaking later in the day. Her comments come ahead of the FOMC meeting later this month.

EURUSD intraday analysis

EURUSD (1.1586): The EURUSD currency pair test the resistance area of 1.1656 - 1.1626 region. Price action failed to break past this level moving back lower. We expect to see the downside continue as the common currency is expected to retest the lower support at 1.1540. The larger triangle pattern could signal a downside breakout to 1.1418 if the support at 1.1540 gives way. To the upside, the EURUSD needs to clear the resistance area convincingly in order to post further gains.

GBPUSD intraday analysis

GBPUSD (1.3006): The British pound failed to break the previous highs around 1.3034 and as a result established a double top pattern. We anticipate a modest pullback to the price action. The lower support at 1.2959 remains the most likely target to the downside. Establishing support here could potentially trigger a short-term uptrend upon a successful breakout of the double top pattern. This will establish the upside target to 1.3205. In the event that the support at 1.2959 fails to hold the declines, GBPUSD could be seen pushing lower and being exposed to the lower support at 1.2808.

XAUUSD intraday analysis

XAUUSD (1193.87): Gold prices are moving back into a consolidation phase. The 4-hour chart signals the consolidation with the triangle pattern. Price action has been hovering around the 1197.50 level for the past few weeks. The downside support is seen at 1183.30 while to the upside, the resistance level at 1219.75 remains open. However, with the strong consolidation, gold prices are expected to maintain the range. A clear breakout above 1197.50 is required for the upside target of 1219.75 to be reached while the downside support at 1183.30 could hold the declines in the near term.