GBP/USD Forecast: Next line of defense aligns at 1.1825
Pressured by the broad-based dollar strength, GBP/USD has suffered heavy losses and dropped to its lowest level in a month below 1.1900. The pair stays on the backfoot on Friday and additional losses could be witnessed in case safe-haven flows continue to dominate the financial markets in the second half of the day. It's worth noting, however, that the near-term technical outlook suggests that the pair could make a correction before the next leg lower.
The data from the US showed on Thursday that the Philadelphia Fed Manufacturing Index improved significantly in August and the weekly Initial Jobless Claims declined to 250,0000, compared to the market expectation of 265,000. On a negative note, Existing Home Sales fell by 5.9% in July. The dollar struggled to make a decisive move in either direction with the initial reaction but hawkish comments from officials triggered an impressive rally in the US Dollar Index (DXY). Read more...
GBP/USD slides below 1.1900 mark, hits one-month low amid broad-based USD strength
The GBP/USD pair prolongs a one-and-half-week-old bearish trend and continues losing ground for the third successive day on Friday. This also marks the sixth day of a negative move in the previous seven and drags spot prices below the 1.1900 mark, or a one-month low during the first half of the European session.
US dollar buying remains unabated on the last day of the week and turns out to be a key factor that continues to exert downward pressure on the GBP/USD pair. In fact, the USD Index (DXY), which tracks the greenback against a basket of half a dozen major currencies has shot to its highest level since July 18 and remains well supported by hawkish Fed expectations. Read more...
GBP/USD to extend further to the downside over the coming weeks – MUFG
The GBP/USD rate has broken back below the 1.2000 level. In the view of economists at MUFG Bank, GBP downside risks persist despite better sales data.
“A recent build-up of long GBP positioning by Leveraged Funds could be vulnerable to liquidation propelling GBP/USD lower still.”
“Instead of the expected modest MoM declines, overall sales increased 0.3% and excluding auto fuel gained 0.4%. The data doesn’t change the overall picture of weak consumer spending. The ex-auto sales print gained 0.2% in June as well but these modest gains were preceded by seven consecutive declines and the record temperatures in the UK in July were very likely a driver of increased sales.” Read more...
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