GBP/USD dives to multi-week lows amid USD strength, eyes on BoE

GBP/USD dropped more than 0.80%, testing the 1.2750 zone.
British and American Manufacturing sectors showed weakness in July.
US JOLTs figures hinted at some softness in the labour market. Eyes on additional ADP, NFPs and Claims.

Patricio Martín FXStreet

The GBP weakened on Tuesday against the USD as the Greenback gained ground against most of its rivals. Ahead of Thursday’s Bank of England (BoE) decision, the weak British made the GBP lose interest while markets await key labour data from the US. Economic data reported on the session from the US came in weak, but the DXY index hold gains above 102.00.

On Tuesday’s session, the US reported mid-tier data. Though slightly below forecast at 46.4, the US ISM July PMI increased from the previous reading of 46. Job Openings on JOLT fell short of expectations, coming in at 9.58M instead of 9.62M. According to Fed Chairman Powell, the economy is resilient, but decisions about the future will be made based on new information, which could lead to volatility in USD price dynamics. This week, investors will be closely watching ADP job employment change, Jobless Claims, and Nonfarm Payrolls to begin placing bets on the upcoming Fed meetings.

On the other hand, the manufacturing PMI released by the Chartered Institute of Purchasing & Supply and S&P Global stood in contraction territory in July, coming in at 45.3, slightly higher than the 45 expected. That said, the focus is on Thursday’s Bank of England (BoE) decision, where markets anticipate a 25 bps hike. Investors will also closely monitor Andrew Bailey’s words to find clues regarding forward guidance.

GBP/USD Levels to watch

The GBP/USD indicates a neutral to bearish technical outlook on the daily chart, suggesting that the bulls might be losing steam on the short term. The Relative Strength Index (RSI) shows a negative slope and fell below its midline, and the Moving Average Convergence Divergence (MACD) displays fading green bars. Moreover, in the bigger picture, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, indicating that the bulls still have the upper hand.

Support levels: 1.2730, 1.2710, 1.2700.
Resistance levels: 1.2830, 1.2850,1.2900 (20-day SMA).

GBP/USD Daily chart

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

EUR/USD holds losses below 1.1850 ahead of FOMC Minutes

EUR/USD stays on the back foot below 1.1850 in the European session on Wednesday, pressured by renewed US Dollar demand and reports that ECB President Lagarde will step down before the end of her term. Traders now look forward to the Minutes of the Fed's January monetary policy meeting for fresh signals on future rate cuts.

GBP/USD defends 1.3550 after UK inflation data

GBP/USD is holding above 1.3550 in Wednesday's European morning, little changed following the UK Consumer Price Index (CPI) data release. The UK inflation eased as expected in January, reaffirming bets for a March BoE interest rate cut, especially after Tuesday's weak employment report.

Gold retains bullish bias amid Fed rate cut bets, ahead of Fed Minutes

Gold sticks to modest intraday gains through the early European session, reversing a major part of the previous day's heavy losses of more than 2%, to the $4,843-4,842 region or a nearly two-week low. That said, the fundamental backdrop warrants caution for bulls ahead of the FOMC Minutes, which will look for more cues about the US Federal Reserve's rate-cut path.

Pi Network rally defies market pressure ahead of its first anniversary

Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Top 3 Price Prediction: Bitcoin, Ethereum, and Ripple face downside risk as bears regain control

Bitcoin, Ethereum, and Ripple remain under pressure on Wednesday, with the broader trend still sideways. BTC is edging below $68,000, nearing the lower consolidating boundary, while ETH and XRP also declined slightly, approaching their key supports.