Recent developments in the U.S. inflation rate and labour market have created uncertainty in the currency market, leading to a bearish sentiment towards the dollar. This has caused key currency pairs, such as GBP/USD, to approach critical levels that could potentially trigger new medium-term trends. Technical analysis of GBP/USD indicates the possibility of a retest of the July high at 1.3050. A strong upward momentum has been observed on the daily timeframe, following a bullish engulfing pattern. If buyers are able to maintain a hold above the 1.3000 level, the price could extend towards last year’s highs around 1.3140-1.3100. Conversely, a rejection from 1.3000 might lead to a corrective decline towards 1.2900-1.2800. Key events impacting GBP/USD pricing include a speech by FOMC member Bostic today at 20:35 (GMT +3:00), UK Public Sector Net Borrowing data tomorrow at 09:00 (GMT +3:00), and the release of FOMC meeting minutes tomorrow at 21:00 (GMT +3:00).
GBP/JPY Technical Analysis
Volatility in yen pairs remains high, with yen sellers managing to recoup some losses after a sharp rise in July. Technical analysis of GBP/JPY suggests the potential for further decline, as a bearish harami pattern has formed following a bounce from 192.00. If yesterday’s low at 188.30 is breached, the downtrend may continue towards 186.00-184.00. However, if the price rises above 192.00, a deeper upward correction is possible. Key news impacting GBP/JPY includes Japan’s Trade Balance (seasonally adjusted) tomorrow at 02:50 (GMT +3:00) and Japan’s Import and Export figures for July at the same time.
The slowdown in U.S. inflation and the cooling labour market have had significant implications for the forex market, particularly impacting currency pairs such as GBP/USD and GBP/JPY. As investor confidence in the Federal Reserve’s decision to potentially cut interest rates grows, the dollar’s bearish sentiment has become more pronounced. Traders should closely monitor key levels and technical patterns to navigate potential trends in these currency pairs amidst the current market conditions.
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