- Yesterday's bullish outside day candle favors upside in GBP.
- But, rising JPY could be an indication of impending risk aversion.
- GBP ranks last on the list of anti-risk currencies.
The return of the "USD-dumping" theme post-US CPI release pushed GBP/USD above 1.40 yesterday.
The price action engulfed previous day's high-low, meaning the GBP/USD created a "bullish outside day candle" yesterday. This, coupled with a close above 1.3986 (38.2% Fib R of 1.4345-1.3765) has boosted expectations of further upside in the pair.
However, the momentum studies are biased bearish, i.e. the 10-day MA is still sloping downwards. Further, the Japanese Yen is driving the action in the FX markets. Yen caught a fresh bid in Asia after Japanese Finance Minister Aso played down the need for FX intervention. The resulting drop in USD/JPY helped Cable hold above 1.40.
Moreover, the JPY continues to rise in the face of rising Treasury yields, suggesting the US yields could be rising for all wrong reasons (like fiscal profligacy). Also, it could be an advance indication that markets are heading towards another round of risk aversion (Yen is classic anti-risk currency).
In such a scenario, Cable could turn lower as the Pound ranks last on the list of anti-risk currencies, courtesy of Brexit uncertainty and domestic political chaos.
The UK economic calendar offers no first tier data releases today. Hence, the spot is at the mercy of the broader market sentiment and action in the Japanese Yen.
GBP/USD Technical Levels
Failure to hold above 1.3986 (38.2% Fib R of 1.4345-1.3765) would allow a re-test of downward sloping 10-day MA positioned at 3937 and 1.39 (psychological support). On the higher side, immediate resistance is seen at 1.4055 (50% Fib R of 1.4345-1.3765). A close higher could yield rally to 1.4124 (61.8% Fib R of 1.4345-1.3765) and 1.4167 (Jan. 30 high).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD recovers further toward 0.6800 on risk-recovery
AUD/USD extends recovery toward 0.6800 in Asian trading on Thursday, despite mixed Australian employment data. The Aussie cheers a return of risk appetite, which weighs on the post-Fed US Dollar recovery. All eyes now remain on US economic data for fresh impetus.
USD.JPY reverses sharply from 144.00, as US Dollar recovery fizzles
USD/JPY is attacking 143.00 in Thursday's Asian session, reversing sharply from 144.00. The pair pares back gains in tandem with the US Dollar, as the latter's post-Fed recovery falters due to a rebound in risk sentiment. The focus is next on the US data due later today and Friday's BoJ decision.
Gold price regains positive traction amid a modest USD pullback from one-week high
Gold price attracts some dip-buying during the Asian session on Thursday and seems to have stalled its retracement slide from the $2,600 mark, or a fresh all-time peak touched the previous day. The US dollar trims a part of its intraday gains to a one-week high, which turns out to be a key factor lending support to the commodity.
Crypto leaders and Congress blast SEC over crypto regulations
In a meeting on Wednesday, several crypto leaders and congress members debunked the Securities and Exchange Commission's harsh regulatory approach toward the crypto industry.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.