GBP/USD Daily Outlook: 1.3735-50 Key Support to Charge GBP Bulls
How to trade GBP/USD today.
FUNDAMENTALS:
The US dollar remained bid despite falling UST yields over concerns that global economic recovery is slowing down. The UK government is likely to go ahead with easing restrictions despite growing cases of Covid infections, which could prompt markets to reassess their bullish bias on the pound. However, as for now, the reaction of GBP has been muted, which signals that investors consider it unlikely that a renewed virus outbreak could derail the UK economic recovery.
The UK lacks any major market reports until Friday, when BoE Governor Bailey is expected to deliver a speech. This means that the pound could be at the mercy of USD dynamics.
Latest Headlines:
USD News:
- US Dollar Index to hit new year highs above 93.45 – Westpac
- US futures extend fall in European morning trade
- US Dollar Index eases from tops, back near 92.60
- USD to remain bid as optimism over a robust global growth is tested – MUFG
- US 10-year yields face strong support at 1.30% - UOB
- US 10-year Treasury yields bounce off five-month low amid covid concerns
GBP News:
- GBP/USD Price Analysis: Rebound remains capped below 1.3800
- GBP/USD risks extra losses below 1.3735 – UOB
- Pound Sterling Price News and Forecast: GBP/USD holds on to corrective bounce off weekly low
- GBP/USD remains depressed below 1.3800 as coronavirus woes probe UK unlock plans
- UK data - RICS House Price Balance for June: 83% (vs. expected 77%)
- GBP/USD Price Analysis: Wednesday's Doji teases bulls around 1.3800
Upcoming Market Reports:
Here are the most important market reports for GBP/USD to follow in the coming days (all times are UTC timezone):
Thursday at 12:30: USD Unemployment Claims (Expected: 345K, Previous: 364K)
Thursday at 15:00: USD Crude Oil Inventories (Expected: -4.0M, Previous: -6.7M)
Friday at 10:00: GBP BOE Gov Bailey Speaks
INTERMARKET:
Yields:
Falling US yields pushed the 2-year yield differentials (UK-US) higher, but the pair fails to follow suit due to USD strength. Interestingly, GBPUSD also failed to follow EURUSD for a push higher, despite both pairs being highly correlated.
TECHNICALS
The 1.3750 level remains an extremely important intraday support. A fall below the level on extended USD strength could see retest of the daily trendline around 1.3735, followed by uncharted territories.
If EURUSD (and US yields) are of any help, the pair is poised to break above a bullish wedge given the 1.3750 level holds. The latest 1-hour candlestick suggests some stopping volume, and volume spread analysis for today generally supports further strength in the pair.
Levels to follow (Liquidity):
Major resistance: 1.39 (weekly high)
Minor resistance: 1.38 (upper wedge line)
Major support: 1.3735-1.3750 (weekly lows)
== SUMMARY ==
A push above 1.38 could see further strength in the pair given the 1.3750 level holds. However, bear in mind that we could see a dip into liquidity below 1.3735 (possibly to the 1.37 level) before lower UST yields kick in and attract buyers in the pair. For this, we would also need a risk-on shift with the US open.
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FUNDAMENTALS:
The US dollar remained bid despite falling UST yields over concerns that global economic recovery is slowing down. The UK government is likely to go ahead with easing restrictions despite growing cases of Covid infections, which could prompt markets to reassess their bullish bias on the pound. However, as for now, the reaction of GBP has been muted, which signals that investors consider it unlikely that a renewed virus outbreak could derail the UK economic recovery.
The UK lacks any major market reports until Friday, when BoE Governor Bailey is expected to deliver a speech. This means that the pound could be at the mercy of USD dynamics.
Latest Headlines:
USD News:
- US Dollar Index to hit new year highs above 93.45 – Westpac
- US futures extend fall in European morning trade
- US Dollar Index eases from tops, back near 92.60
- USD to remain bid as optimism over a robust global growth is tested – MUFG
- US 10-year yields face strong support at 1.30% - UOB
- US 10-year Treasury yields bounce off five-month low amid covid concerns
GBP News:
- GBP/USD Price Analysis: Rebound remains capped below 1.3800
- GBP/USD risks extra losses below 1.3735 – UOB
- Pound Sterling Price News and Forecast: GBP/USD holds on to corrective bounce off weekly low
- GBP/USD remains depressed below 1.3800 as coronavirus woes probe UK unlock plans
- UK data - RICS House Price Balance for June: 83% (vs. expected 77%)
- GBP/USD Price Analysis: Wednesday's Doji teases bulls around 1.3800
Upcoming Market Reports:
Here are the most important market reports for GBP/USD to follow in the coming days (all times are UTC timezone):
Thursday at 12:30: USD Unemployment Claims (Expected: 345K, Previous: 364K)
Thursday at 15:00: USD Crude Oil Inventories (Expected: -4.0M, Previous: -6.7M)
Friday at 10:00: GBP BOE Gov Bailey Speaks
INTERMARKET:
Yields:
Falling US yields pushed the 2-year yield differentials (UK-US) higher, but the pair fails to follow suit due to USD strength. Interestingly, GBPUSD also failed to follow EURUSD for a push higher, despite both pairs being highly correlated.
TECHNICALS
The 1.3750 level remains an extremely important intraday support. A fall below the level on extended USD strength could see retest of the daily trendline around 1.3735, followed by uncharted territories.
If EURUSD (and US yields) are of any help, the pair is poised to break above a bullish wedge given the 1.3750 level holds. The latest 1-hour candlestick suggests some stopping volume, and volume spread analysis for today generally supports further strength in the pair.
Levels to follow (Liquidity):
Major resistance: 1.39 (weekly high)
Minor resistance: 1.38 (upper wedge line)
Major support: 1.3735-1.3750 (weekly lows)
== SUMMARY ==
A push above 1.38 could see further strength in the pair given the 1.3750 level holds. However, bear in mind that we could see a dip into liquidity below 1.3735 (possibly to the 1.37 level) before lower UST yields kick in and attract buyers in the pair. For this, we would also need a risk-on shift with the US open.
Please hit the 'LIKE' button if you find this post useful. Also, don't forget to follow to get more trade ideas like this. Thanks!
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