GBP/USD is battling 1.2700, under pressure in the European trading hours on Thursday. The Pound Sterling fails to cheer hawkish BoE Pill’s comments amid a notable US Dollar rebound, as traders await the US PCE inflation data for fresh cues.
A crucial pivot point for GBP/USD is at 1.2700 (100-period Simple Moving Average (SMA), Fibonacci 23.6% retracement of the most recent downturn). Before 1.2760 (200-period SMA) and 1.2780 (Fibonacci 38.2% retracement), which could serve as temporary resistance if that level is confirmed as support, 1.2730 (static level) may act as first resistance.
Looking for bullish continuation
WDYS? 🤔 pic.twitter.com/ZQzmo3ASg8
— Alao Temitope (@Temmitey) August 31, 2023
GBP/USD climbed to a weekly high of 1.2747 on Wednesday before staging a technical correction toward 1.2700 early Thursday. The pair’s technical outlook points to a bullish tilt as investors await key data releases from the US.
— Tradest, LLC (@TradestLLC) August 31, 2023
On Wednesday, the US Dollar’s weakening across the board helped GBP/USD to extend its weekly advance. According to the US Bureau of Economic Analysis’ second estimate, the annualized growth rate of the second quarter’s gross domestic product (GDP) was reduced from 2.4% to 2.1%. Additionally, according to ADP, private sector employment increased by 177,000 in August, less than the 195,000 analysts had predicted. Following the release of these statistics, the yield on the 10-year US Treasury note continued to decline, and the USD Index, which measures the value of the USD relative to a basket of six major currencies, had a daily loss of 0.3%.
Early Thursday, the cautious market stance helps the USD erase some of its weekly losses and causes GBP/USD to edge lower. Meanwhile, Bank of England (BoE) Chief Economist Huw Pill’s comments on the policy outlook makes it difficult for Pound Sterling to preserve its strength. Pill said that there was no room for complacency on inflation but noted that he would prefer to hold rates steady for longer.
The reason for the sharp rise in gold prices may be the decline of the #US dollar, which provides substantial support for its rise. The dollar's depreciation can be attributed to the rise of emerging economies. Greatly positive for gold in the near future.#xauusd #gold #FED pic.twitter.com/EkTtl3zlXd
— Fangyu (@Fangyu_HK) August 31, 2023
Price of the pound today
The Pound Sterling (GBP) percentage movement today in relation to the main currencies listed is shown in the table below. The British pound was the least competitive versus the Japanese yen.
In the second half of the day, weekly Initial Jobless Claims and Personal Consumption Expenditures (PCE) Price Index data will be featured in the US economic docket.
Yesterday the British pound gained 0.57% and became the leader of the day. On the daily chart, the price touched the balance line indicator. The target range of 1.2799-1.2814 has been opened. Even if the price doesn't break the equilibrium line, it will adapt to the target range pic.twitter.com/pnVQe4uHr4
— Carla Chloe (@Ada769561273817) August 31, 2023
FOMC Chairman Jerome Powell said that the annual Core PCE inflation was forecast to edge higher to 4.3% in July while speaking at the Jackson Hole Symposium on Friday. Unless there is a significant surprise in either direction, investors could refrain from reacting to that data. In case the number of first-time applications for unemployment benefits rise toward 250,000, the USD could come under renewed selling pressure in the second half of the day.