- The US dollar rallied on poor Chinese data.
- China’s economic recovery paused in July.
- BoE is expected to deliver a 50bps rate hike in the September meeting.
The GBP/USD forecast is bearish as it continued to fall early Tuesday, approaching the 1.20255 region after falling on Monday. The near-term technical outlook’s bearish slant makes further losses appear likely.
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Due to widespread risk aversion to publishing poor Chinese statistics, the dollar gained ground against the bulk of its competitors on Monday.
According to official statistics released Monday, China’s industrial output increased 3.8% from a year earlier in July, slipping from a 3.9% increase in June, as the world’s second-largest economy’s fragile recovery stalled.
The dollar should be able to maintain its strength and prevent a rebound in GBP/USD even if Wall Street’s key indices begin sharply lower.
According to Reuters, 30 of 51 economists surveyed recently believe the Bank of England (BOE) will raise the policy rate by 50 basis points at its September meeting. The British pound was unable to find any demand thanks to this headline. Over the weekend, the Telegraph reported that BOE Governor Bailey might be open to revising the bank’s mandate.
GBP/USD key events today
From the UK, the Average Earnings figure will provide a good indicator of the growth in personal income for the given month. The Claimant Count Change will quantify the country’s unemployment rate change over the previous month. An increasing trend denotes labor market slackness, which impacts consumer spending and economic expansion.
In the US, the Building Permits report, which tracks changes in the number of new building permits issued by the government, will be released.
GBP/USD technical forecast: Bears eying 1.2025 breakout
GBP/USD has been caught within a range for the past few weeks, with resistance at 1.22606 and support at 1.20255. The price is currently trading at the support level, at which point bulls might come in and take over.
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The price is trading well below the 30-SMA, a sign that bears are in charge. The RSI also supports bearish momentum as it trades below 50. If bears keep their strength, the price will likely break below the support level and fall toward the next support at 1.19257.
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Saqib Iqbal
