GBP/USD: Buyers struggling to keep the wheels upright ahead of major EU summit, UK CPI

The GBP heads into a high-impact Wednesday with inflation data for both the EU and the UK on the docket.
Today's EU leadership summit in Brussels promises plenty of Brexit-centric comments, as the current line of rhetoric sees Brexit talks both close and not-close to achieving a deal at the same time.

Joshua Gibson FXStreet

The GBP/USD is trading towards the downside in early Wednesday action, testing into 1.3170 ahead of the London market session.

Sterling traders are being sent adrift by an endless barrage of Brexit headlines and comments from EU and UK leaders, with little evidence that any forward progress is being made. UK wages data reported in yesterday's session helped to bolster the GBP somewhat, but the overall mood in markets remains taut in the run-up to Wednesday's EU leadership summit, where Brexit will be the top billing for the day.

Alongside the headline-driving EU summit that kicks off today, Britain sees another round of top-tier economic data, with September's CPI in the barrel for 08:30 GMT. The core annualized figure is forecast to dip slightly to 1.8% (previous 2.1%), while y/y CPI for September is expected to tick upwards from 2.7% to 2.8%. With Europe also dropping their own CPI data around the same time, markets are geared up for a highly volatile mid-week window, with critical inflation figures and expected grandstanding from the leadership summit all crashing together through the day.

GBP/USD levels to watch

As noted by FXStreet's Valeria Bednarik, tightly-stretched hopes for a successful Brexit deal are keeping Cable bulls at bay, with some bullish potential still built into the charts, but downside pressure continues to remain a contender for the GBP/USD's direction: "uncertainty surrounding a Brexit deal maintains bulls on-hold, although it's clear that the market believes a deal will be achieved. In the 4 hours chart, the pair is trading above its 20 SMA, which stands a couple of pips above the mentioned Fibonacci level, reinforcing the relevance of the static support. The Momentum indicator in the mentioned chart heads higher around its mid-line, while the RSI indicator eases from its highs and stands at 53, limiting the upward potential for the pair. A break through the mentioned 1.3257 level could result in a steeper advance, although it's all about Brexit and how the market perceives chances of a deal."

Support levels: 1.3170 1.3130 1.3095

Resistance levels: 1.3210 1.3260 1.3300

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.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold consolidates above $4,300 as traders look to Fed rate decision for fresh impetus

Gold struggles to capitalize on its weekly gains, though it holds above the $4,300 mark through the Asian session. The latest optimism over an interim US-Iran peace deal keeps the US Dollar on the defensive, which is seen supporting the bullion. The commodity remains below the weekly swing high set on Monday and a technically significant 200-day SMA level.

Bitcoin holds $65,000 as Uniswap and Worldcoin extend rally

Bitcoin (BTC) is experiencing headwinds above $65,000 following the Bank of Japan’s rate hike to 1% on Tuesday. Still, Uniswap (UNI) and Worldcoin (WLD) continue to rally amid rising retail interest, while Bitcoin’s recovery grows heavy. Bitcoin edges higher at press time on Wednesday, inching closer to $66,000 as it maintains a mixed near-term tone following the recent rebound from $60,000.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.