GBP/USD back into familiar territory below 1.38

Sterling bulls' hopes for a May rate hike dashed against the rocks of a souring UK economy.
UK PMIs this week promise little shelter for fleeing Sterling traders.

Joshua Gibson FXStreet

The Sterling is trading quietly in Monday's early session, cycling around 1.3775 after Friday's dump saw the GBP shed nearly two hundred pips against the Greenback.

Swing Trades: GBP/USD

The GBP/USD accelerated recent losses to cap off last week following a GDP release with the worst growth figure in five years, with the UK's quarterly GDP printing at 0.1% versus the expected 0.5%. A new week begins with the Sterling having fallen over four percent since April's high of 1.4375.

Monday's European session is a decidedly quiet affair for the GBP with nothing scheduled on the economic calendar, but the GBP's recent rout is a warning sign for would-be bullish traders as the Bank of England (BoE) heads into their next rate call, and it looks increasingly like the BoE is going to have to hold off on a May rate increase, which was priced in on traders' expectations of a rate hike, and now looks unlikely to happen following a vicious cycle of worse-than-expected macro figures for the UK's economy within recent weeks.

GBP/USD Weekly Forecast: With UK economy decelerating, rate hike in May is a joking option

Markit Manufacturing and Services PMIs are scattered throughout the week, beginning with the Markit Manufacturing PMI on Tuesday at 08:30 GMT (forecast 55.3, prev. 55.1). A continued piling-up of drooping figures for the UK will continue to punish the Sterling moving forward, but first the US session will see the Core Personal Consumption Price Index on Monday at 12:30 GMT (expected 1.8%, prev. 1.6) which could derail the GBP against the Greenback early if the figures beat expectations.

GBP/USD analysis: UK data disappointed big, no rate hike at sight

GBP/USD Levels to watch

Evaporated expectations for a rate hike from the BoE in May and swooning macro figures for the UK's economy are looking set to continue hammering the Sterling, and as FXStreet's Chief Analyst Valeria Bednarik noted, "the GBP/USD pair is technically bearish according to the daily chart, as the pair settled far below its 20 DMA, which slowly gyrates south, while technical indicators maintain their strong downward slopes near oversold readings. Shorter term, and according to the 4 hours chart, the risk is also leaned to the downside, as a bearish 20 SMA has been steadily capping the upside, now around 1.3900, while technical indicators stalled their recoveries from extreme oversold levels and the RSI already turned south, currently at 23. The pair bottomed at 1.3746 last Friday, making of the level and immediate support and the one to break to confirm additional declines ahead."

Support levels: 1.3745 1.3710 1.3680

Resistance levels: 1.3820 1.3860 1.3900

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.