Attractive Levels for GBPUSD Bulls
GBPUSD Analysis and News
- GBP bulls may find value at these cheap levels
- Tomorrows Employment report to dictate near-term direction
See how retail traders are positioning in GBPUSD as well as other major FX pairs on an intraday basis using the DailyFX speculative positioning data on the sentiment page.
Attractive Levels for Long Term GBP Bulls
Over the past month GBP has plunged from post-Brexit highs (1.4377) to the mid-1.34s as the BoE deferred from raising rates in May after a raft of soft data, while the recovery in the USD-index also weighed. However, following the recent pounding, long term GBP bulls may find tactical upside at these relatively cheap levels.
Data Dependent GBP
Last week, the Bank of England signaled that a rate hike in 2018 remains appropriate, subsequently this has heightened the degree of data dependency for GBP. As such, tomorrows employment report will be key for near-term direction, as is usually the case, focus will be on the wage components, whereby the average earnings ex-bonus is expected to tick up to 2.9% from 2.8%, employment growth is seen at a healthy 130k. A robust employment report with better than expected wage data will begin to reignite expectations for an August rate hike which currently stands at a rather low 40%, subsequently a strong labour report could be supportive for GBP longs. Link to live data coverage of tomorrows UK Employment report, click here
Source: Thomson Reuters
USD Recovery Running Out of Steam
Elsewhere, strength in the US Dollar is losing its momentum given that its rapid rise is running the risk of a near-term pullback. Last week’s CPI disappointment provided the first warning of this as it reigned in expectations for 3 more rate hikes this year, particularly as it follows from the recent FOMC meeting as members signaled that it will not over-react to an inflation overshoot. In turn, the continued easing of the USD gains will likely support GBP in the short, which could be looking to target above 1.3700.
For a more in-depth analysis on Sterling, check out the Q2 Forecast for GBP/USD
GBP/USD CHART: 1-HOUR TIME FRAME (September 2017-May 2018)
GBPUSD Technical Levels
Support: 1.3500, 1.3490 (50% Fibonacci Retracement of 1.2603-1.4377 rise) 1.3458 (January 11th low)
Resistance: 1.3596 (Friday’s high), 1.3655 (2017 high), 1.3717 (March 1st low)
RSI indicator pulls out of oversold territory and suggesting a lift higher is on the horizon.
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.firstname.lastname@example.org
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.