GBPUSD | Perspective for the new week | Follow-up

Updated

This video dissects the recent market trends and economic data that have been impacting the Pound Sterling and the US Dollar.

Last Friday, data revealed a positive turn in UK house prices for May, following a couple of months of decline. However, all eyes were on the report on US inflation, which significantly influenced price movements. The Pound Sterling (GBP) demonstrated signs of recovery, particularly after the monthly United States core Personal Consumption Expenditure Price Index (PCE) data for April fell short of expectations. With underlying inflation growing at a slower rate than anticipated.

Additionally, the downwardly revised GDP estimates have weighed on the US Dollar and increased the speculation on the likelihood of the Fed reducing interest rates in September, with estimates surpassing the 50% mark.

Shifting focus to the United Kingdom, the survey of economic outlook conducted by Lloyds Bank highlighted easing price pressures and strong expectations surrounding the Bank of England (BoE) potentially initiating interest rate reductions earlier than anticipated hereby bolstering business optimism.

In this video, we navigated the current market dynamic to unravel the potential direction of price action in the coming week as market participants digest the implications of the economic data from both economies

GBPUSD Technical Analysis:
Will the pound hold above $1.27000? Watch this video for key trades this week. We analyze trends and levels for market insights. Join the discussion for updates on GBP/USD trading. Stay tuned for more content. Happy trading!

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Trading in the foreign exchange market and other instruments carries high risk and may not be suitable for all investors. The content provided here is for educational purposes only. Evaluate your financial situation and consult with a financial advisor before making any investment decisions. Past performance is not indicative of future results.

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The British Pound is starting the month on a bearish note. However, the downside is cushioned by modest US Dollar weakness, driven by signs of easing inflationary pressures in the United States.

The British Pound on the other hand may find support from expectations that persistent price pressures in the United Kingdom could prompt the Bank of England to maintain interest rates at their current levels for a bit longer.

As we await the release of the ISM Manufacturing PMI from the US for further market impetus, we will use the newly identified levels on the 1H timeframe as our guide for today's trading activities.

Good Morning

Trade closed manually

#GBPUSD

As discussed during our live session this morning; Price action is back into our sell entry zone.
Are we seeing a retest of structure?

The appearance of a reversal set-up within this zone will welcome selling opportunities.

NB: All levels on the chart remain valid for trading opportunities

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Buy position triggered; secure some profit

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STRUCTURAL UPDATE

Secure some profit as we look out for new trading opportunities.

Trade closed manually

All our buy positions from yesterday's session have been closed with a minimum profit of 60 pips as renewed selling pressure dominates the Asian trading session. A shift towards negative risk sentiment has rekindled demand for the US Dollar ahead of the release of US JOLTS Job Opening data, causing the British pound to struggle to capitalize on the bullish momentum that started yesterday.

In the short term and given the recent selling pressure, the bias appears to favor bullish traders, particularly following increased speculation of an impending rate cut by the Federal Reserve (Fed). This sentiment is further bolstered by the disappointing US ISM PMI data released yesterday.

Furthermore, expectations that the Bank of England (BoE) may maintain interest rates at their current levels for an extended period are expected to support the British Pound and confirm the positive near-term outlook for the GBP/USD pair.

Analyzing from a technical standpoint, the recent bearish movement could signal the beginning of a retracement phase, possibly driven by short-term profit-taking activities ahead of today's US economic events [JOLTS Job Opening and Factory Orders data]. The extent of this retracement remains uncertain, prompting us to monitor specific chart structures for potential reversal setups that could sustain the upward trend continuation [see chart for details]. At the moment, I have a strong feeling that the GBP/USD pair is likely to face minimal resistance to the upside.

However, I must state here that a breakdown below the descending trendline could present a selling opportunity. Stay tuned for further updates as we closely monitor price action developments.

Good Morning

Note

#GBPUSD

STRUCTURAL UPDATE | 15 Min Timeframe

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UPDATE

Price is now within the buy zone identified earlier.

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UPDATE

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Secure the buy position

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STRUCTURAL UPDATE

Note

The second leg of this week's bullish momentum has struggled to gain traction as renewed demand for the US Dollar drags the pair lower. However, the US Dollar is is also struggling to capitalize on its rebound ahead of today's US macroeconomic data, as market participants appear to wait for the data before making any directional bets.

UK Retail Sales Data: One factor contributing to the rangebound trading is the UK BRC Like-For-Like Retail Sales data, which grew less than expected for the year ended in May, printing at 0.4% YoY compared to the forecast of 1.2%. This data indicates that the UK retail sales sector is still struggling to recover.

US Job Market Data: On the US side, JOLTS Job Openings in April eased to 8.059 million, down from the previous revised figure of 8.355 million and missing the forecast of 8.34 million. The still-tight job market is dampening broad-market hopes for rate cuts, souring risk sentiment due to the data miss.

Upcoming US Data: In light of these mixed market dynamics, attention will turn toward the US ADP data and the ISM Services PMI today for fresh impetus. These releases are crucial for shaping near-term market sentiment and potential moves.

Given these developments, the levels and trendlines indicated on the chart will guide today's trading activity. We will elaborate on the current market dynamics during our upcoming live session.

Good Morning

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#GBPUSD

The bullish momentum appears to resume as ADP employment data did not meet market's expectation; secure some profit

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All buy positions closed as a sharp move in price action retests the the descending trendline that was broken this morning. The uptrend continuation remains valid hence levels remain intact for re-entry.

NB: Please note that the only condition that will support selling opportunities is the breakdown/retest of the $1.27560.

Trade closed manually

All sell positions have been closed with a modest profit as the British pound faces selling pressure. However, the path of least resistance still points to the upside. The downbeat US May ISM Manufacturing PMI report and weaker Q1 GDP data have fueled expectations of easing policy from the Fed in September, which may eventually weigh on the US Dollar.

Nevertheless, the not-so-encouraging economic data from the UK also deserve attention. The UK services sector reported slower growth in May, with the S&P Global Services PMI falling to a six-month low of 52.9 from 55.0 in April, in line with expectations. Additionally, the Composite PMI dropped to a two-month low of 53.0 in May from a one-year high of 54.1 in April. These factors could influence or limit the upward trajectory and lead to extended sideways trading ahead of the NFP release on Friday.

We will continue to monitor price action around the levels/structures identified on the chart. Stay tuned for updates on new developments, especially in light of today's US Initial Jobless Claims and Balance of Trade reports.

Good Morning

Note

#GBPUSD

STRUCTURAL UPDATE

The ascending trendline on the 1H timeframe is going to be playing a significant role in preparing us ahead of the market's anticipation/reaction to the US Initial Jobless claims and Trade Balance report coming up in about 45 minutes from now.

Trade active

We currently have two buy positions running in profit as the GBP/USD pair trades positively for the third consecutive day. Markets are increasing their bets that the US Federal Reserve will cut interest rates later this year amidst signs of a sluggish US economy, which is dragging down the US Dollar (USD) and bond yields, thereby benefiting the British Pound.

All eyes will be on the US Non-Farm Payrolls (NFP) data for May, which is scheduled for release later today. The NFP figure is projected to show 185,000 job additions in the US economy for May, with the Unemployment Rate expected to remain steady at 3.9%. Softer-than-expected employment data might trigger speculation of a Fed rate cut, potentially exerting further selling pressure on the US Dollar.

Additionally, the UK Employment data and the monthly Gross Domestic Product (GDP) data for April are also due today. These reports might provide insights into the Bank of England (BoE) rate cut expectations. Given these developments and the potential for increased volatility, it is prudent to secure our buy positions.

Happy Friday!

darcsherry

Trade smart. Trade consciously

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GBPUSD | Perspective for the new week | Follow-up

by darcsherry

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