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1 Sep 2015
GBP/USD: will it plummet below 200 DMA now?
FXStreet (Guatemala) - GBP/USD has been rejected at the 20 SMA on the 30 minute sticks and offered back and down to test the bulls commitments at the 1.53 handle for a third time in London and US markets at the start of the month.
GBP/USD down through 200 DMA
GBP/USD fell through and below 1.54 and the 200 DMA at at 1.5360 at the end of August for a third time since May, and the question is whether the price will diverge from the indicator or remain within recent ranges?
The pound has been one of the worst performing major currencies since China devalued the renminbi last month and is now trading with a negative bias after being capped at 1.5817 and falling below the support of the rising channel of July/August business.
The UK has little data to support the pound this week, while the data it did have was a negative outcome, with UK Markit CIPS manufacturing PMI that arrived 51.5 vs 52.0 exp. UK share markets also returned from a long weekend with a bearish outlook, FTSE starting out -1.0% and closing much lower at -3.0%.
GBP/USD now depends on US data
The week will focus back on the US now and the looming Nonfarm Payrolls data due, although today's worst result in ISM manufacturing for the US since May 2013 was an initial blow to the greenback, supporting GBP/USD currently. This arrived at 51.1 vs 52.56 expected and 52.7 previous and isolated data like that may make it hard for the Fed to justify a rate hike this month on the 17th.
Carney supports positive GBP outlook
Looking ahead, in respect of the pound, there may still be some life in it left yet having taken Carney's statements at the Jackson Hole over the weekend and signal that market expectations for BoE policy may have become too dovish.
Currency Analyst at BTMU Lee Hardman noted that Governor Carney stated that, “Developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert”. Hardman also noted that he reiterated that, “The prospect of sustained momentum in the UK economy and gradual firming of inflationary pressures will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”, and suggested, “The comments signal that recent pound weakness is likely to prove short-lived”.
GBP/USD downside open to 1.5170 area
Technically, Emmanuel Ng at OCBC Bank sees the likeliness of the pair re-visiting the 1.5170 area, while Karen Jones, chief analyst at Commerzbank explained a break there could open up 1.5088, the 61.8% retracement.
GBP/USD down through 200 DMA
GBP/USD fell through and below 1.54 and the 200 DMA at at 1.5360 at the end of August for a third time since May, and the question is whether the price will diverge from the indicator or remain within recent ranges?
The pound has been one of the worst performing major currencies since China devalued the renminbi last month and is now trading with a negative bias after being capped at 1.5817 and falling below the support of the rising channel of July/August business.
The UK has little data to support the pound this week, while the data it did have was a negative outcome, with UK Markit CIPS manufacturing PMI that arrived 51.5 vs 52.0 exp. UK share markets also returned from a long weekend with a bearish outlook, FTSE starting out -1.0% and closing much lower at -3.0%.
GBP/USD now depends on US data
The week will focus back on the US now and the looming Nonfarm Payrolls data due, although today's worst result in ISM manufacturing for the US since May 2013 was an initial blow to the greenback, supporting GBP/USD currently. This arrived at 51.1 vs 52.56 expected and 52.7 previous and isolated data like that may make it hard for the Fed to justify a rate hike this month on the 17th.
Carney supports positive GBP outlook
Looking ahead, in respect of the pound, there may still be some life in it left yet having taken Carney's statements at the Jackson Hole over the weekend and signal that market expectations for BoE policy may have become too dovish.
Currency Analyst at BTMU Lee Hardman noted that Governor Carney stated that, “Developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert”. Hardman also noted that he reiterated that, “The prospect of sustained momentum in the UK economy and gradual firming of inflationary pressures will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”, and suggested, “The comments signal that recent pound weakness is likely to prove short-lived”.
GBP/USD downside open to 1.5170 area
Technically, Emmanuel Ng at OCBC Bank sees the likeliness of the pair re-visiting the 1.5170 area, while Karen Jones, chief analyst at Commerzbank explained a break there could open up 1.5088, the 61.8% retracement.