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GBP/USD Rebound Vulnerable to Weak U.K. Job/Wage Growth Report

GBP/USD Rebound Vulnerable to Weak U.K. Job/Wage Growth Report

David Song, Strategist

Talking Points:

- GBP/USD Outlook Hinges on U.K. Jobless Claims, Wage Growth Report.

- AUD/USD Former Support Zones in Focus as Pair Mounts Larger Rebound.

- USDOLLAR Threatens Bullish Momentum- Fed’s Stanley Fischer Warns of Low Inflation.

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GBP/USD

GBP/USD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • GBP/USD may continue to track sideways in the days ahead amid the ongoing closes above near-term support around 1.5450 (61.8% retracement) to 1.5460 (23.6% expansion); will keep a close eye on the key data prints amid the tightening race between the Bank of England (BoE) and the Federal Reserve to normalize monetary policy.
  • Despite expectations for another 1.0K rise in U.K. Jobless Claims, sticky/strong wage growth figures may heighten the appeal of the British Pound as it puts increased pressure on the BoE to lift the benchmark interest rate off of the record-low.
  • Nevertheless, the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long GBP/USD since July 1, but the ratio remains off of recent extremes as it sits at +1.35 with 58% of traders long.

AUD/USD

AUD/USD Daily Chart
  • Long-term outlook for AUD/USD remains bearish amid the divergence in the policy outlook, but may see a larger rebound in the days ahead as the RSI carves a near-term upward trend.
  • As the Reserve Bank of Australia (RBA) highlights an improved outlook for the labor market, a pickup in the region’s Wage Price Index may further reduce speculation for lower borrowing-costs as the central bank endorses a wait-and-see approach.
  • Will watch former support zones for new resistance, with the first region of interest coming in around 0.7490 (61.8% expansion), following by 0.7570 (50% expansion) to 0.7590 (38.2% retracement).

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Read More:

Price & Time: USD Continues to Frustrate

AUDUSD & NZDUSD Behavior Changes; Pounce on the Bounce?

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12007.8312052.3412003.4-0.06100.53%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Ongoing failed attempts to close above 12,049 (78.6% retracement) raises the risk for a larger pullback in the Dow Jones-FXCM U.S. Dollar especially as the RSI threatens the bullish momentum carried over from May.
  • Even though the Fed sees the U.S. economy approaching full-employment, the disinflationary environment may become a growing concern for the central bank and spur a further delay of the normalization cycle as the renewed weakness in oil/energy prices dampens the outlook for price growth.
  • As the USDOLLAR comes off of near-term resistance, the Fibonacci overlap around 11,951 (38.2% expansion) to 11,965 (23.6% retracement) remains in focus as the greenback searches for support.

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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