- Pound receives a modest relief after Johnson’s Brexit proposal, remains pressured.
- US Dollar drops amid weak economic data, lower yields.
The GBP/USD pair ended the week modestly higher and far from the lows. It was about to finish the week hovering around 1.2320/30, flat on Friday after the NFP report.
Between Brexit and US data
The Pound managed to remove some of its vulnerability over the week after the Brexit plan presented by UK Prime Minister Boris Johnson received support from Tories. Also, some negotiations and even a Brexit extension are back on the table. Still, uncertainty continues to be the main theme.
The main focus in the UK will continue to be Brexit negotiations, ahead of the European Union Summit of 17-18 October. "With respect to economic releases next week, we look forward to getting the monthly GDP estimate for August. PMIs continue to suggest the UK is stagnating but the GDP data may be distorted by stockpiling ahead of the Brexit deadline on 31 October (although most data suggest companies have not stockpiled to the same extent so far). We expect GDP was flat in August,” wrote Danske Bank analysts.
Regarding the Greenback, it finished the week lower after reversing the trend from weekly lows. Weaker-than-expected US data weighed on the US Dollar over the week. On Friday the NFP came in mixed offering relief and signaled the labor market remains solid despite slowing down.
Economic data is likely to continue to have an impact on Federal Reserve rate cut expectations. Next week the calendar is quiet week regarding economic report. The most important will be inflation on Thursday.
A critical event will be the FOMC meeting minutes. Analysts at Danske point out that at the September meeting the Fed cut its target range by 25bp to 1.75-2.00% as expected, however, it did not precommit to more easing. “We had a clear division in the committee and the biggest number of dissenters since 2016 so it will be interesting to see if the minutes will shed light on the different stances within the Fed.” Also more headlines regarding US trade policy are expected.
GBP/USD outlook levels
Yohay Elam, analysts at FXStreet points out the picture in the GBP/USD pair has become more bearish. “GBP/USD has lost its uptrend momentum on the daily chart but managed to hold above the 50-day Simple Moving Average (SMA). The currency pair trades below the 100 and 200 SMAs. It is capped by downtrend resistance, which has recently formed.”
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
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.