- GBP/USD consolidates as traders look to the BoE for clues.
- US dollar could be on the verge of an upside extension.
GBP/USD is flat at the start of the week, consolidating the gains made over the past number of sessions as the price meets a tough area of resistance.
At the time of writing, cable is trading at 1.3822 and holding at the lows of the session so far, sliding from 1.3836.
From a fundamental standpoint, the positives are with the EU granting a delay to the chilled meat ban in Northern Ireland, which has helped to calm fears over trade tensins.
With that being said, it may not take much to kick up political dust around this theme so markets will remain on edge and a new round of tough EU-UK trade negotiations may not be too far over the horizon.
Meanwhile, the Bank of England is coming back into the market's agenda.
Bank of England Governor Bailey has been sounding extremely cautious of late.
The governor of the Old Lady has warned that the bank shouldn’t overreact to what he views as a temporary spike in inflation and has argued that a rapid recovery after lockdowns end is likely to fade soon.
Sounding familiar? The Federal Reserve has taken the same stance, yet markets are not so convinced which has fuelled the recent firmness in the greenback.
If there is an environment of continuous strong US data over the coming weeks, then that should lend support to the greenback which could be on the verge of a daily technical extension to the upside:
Meanwhile, noting weaknesses in the labour market, the BoE governor said, “our current view is that the economy will revert to the lower average underlying growth rates that we have seen since the financial crisis. Reverting to the pre-Covid pattern of lower trend growth will bring its own challenges.”
The next policy meeting is August 5 and no change is expected, especially while the lone hawk Chief Economist Haldane is due to step down beforehand.
In the week ahead, another speech by Andrew Bailey will be the focus and the UK's coronavirus lockdown updates.
GBP/USD technical analysis
Bulls take on the resistance on the daily chart and given the break of the April lows, there could be more from them towards the 1.3870s.
Failing that, the price would be expected to let to the downside.
|Today last price||1.3824|
|Today Daily Change||-0.0007|
|Today Daily Change %||-0.05|
|Today daily open||1.3831|
|Previous Daily High||1.3845|
|Previous Daily Low||1.3732|
|Previous Weekly High||1.394|
|Previous Weekly Low||1.3732|
|Previous Monthly High||1.4249|
|Previous Monthly Low||1.3787|
|Daily Fibonacci 38.2%||1.3801|
|Daily Fibonacci 61.8%||1.3775|
|Daily Pivot Point S1||1.376|
|Daily Pivot Point S2||1.3689|
|Daily Pivot Point S3||1.3647|
|Daily Pivot Point R1||1.3874|
|Daily Pivot Point R2||1.3916|
|Daily Pivot Point R3||1.3987|
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.