- The Sterling continues to drift in between recent swing points as markets look forward to Thursday’s BoE showing.
- Directional momentum rests in the hands of USD traders for Tuesday with US consumer spending data in the pipe.
The GBP/USD is trading into 1.3120 ahead of Tuesday’s London market session, trading down from Monday’s high of 1.3151 but still managing to remain buoyant above recent low just beneath the 1.3100 handle as Sterling traders await the Bank of England’s (BoE) latest rate hike announcement dropping this Thursday.
Tuesday is almost entirely free and clear of any data for the GBP, though the low-tier and inconsequential BRC Shop Price Index for June is slated for late in the day at 23:01 GMT, which last came in at -0.5%. Sterling traders are much more interested in the BoE’s expected 25 bps rate hike scheduled for Thursday, though with economic data for the UK recently swinging firmly into the bearish side, odds of another dovish retreat is back on the table, and the GBP can expect to see further weakness heading into the mid-week.
Tuesday will be seeing some volatility on the USD-side of the major Cable pair, with the US Core personal Consumption indicator dropping at 12:30 GMT, and the y/y price index for June is expected to remain steady at 2%. With the BoE pushed out to Thursday, the GBP/USD is going to be seeing added emphasis on US data as GBP participants sit on the sidelines and await news from the BoE’s Mark Carney.
Brexit concerns are pushed on the back burner for this week as central bank action takes center stage, but negative headlines are sure to continue chipping away at the Sterling’s base, with business sector leaders beginning to step up the pace of delivering urgent reminders to the UK’s parliament about just how bad a hard-Brexit scenario would be for the British economy, and with talks not scheduled to begin again until mid-August, there is still plenty of room for trade angst to return to the fold.
GBP/USD Levels to watch
Technical readings for the GBP/USD pair are twisting into the middle as market participants await developments from key central banks across the globe this week, and as FXStreet’s own Valeria Bednarik noted: “technically, the GBP/USD pair remains in a bearish market, having been steadily falling ever since topping at around 1.4300 last May. In the shorter term, and according to the 4 hours chart, the pair presents a neutral-to-bearish stance, with the lack of clear directional strength exacerbated by summer limited volumes. In the mentioned chart, the price stands a handful of pips above a flat 20 SMA and below a bearish 200 EMA, while technical indicators corrected higher, with the Momentum still in negative territory and the RSI turning south right after entering positive territory. The main support from here continues being the 1.3090 level, while spikes beyond 1.3200 ahead of BOE will likely attract selling interest.”
Support levels: 1.3090 1.3045 1.3010
Resistance levels: 1.3150 1.3190 1.3230
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