GBP/USD slips below 1.25 ahead of UK inflation figures, Fed
1. Technical Overview
From a technical perspective, the pair has been showing some resilience below 38.2% Fibo. level of the 1.3178-1.1959, clearly suggesting that the near-term bias remains in favour of bullish traders. Hence, a follow-through buying interest has the potential to lift the pair further 50% Fibo. level resistance near the 1.2560-65 region, above which the momentum could further get extended beyond the 1.2600 round-figure mark, towards testing the next major confluence region near the 1.2700-20 region - comprising of 61.8% Fibo. level and the very important 200-day SMA.
On the flip side, any meaningful pullback now seems to attract some fresh buying interest around the 1.2415 region (38.2% Fibo.) and help limit the downside near the 1.2380 horizontal support. Failure to defend the mentioned levels might trigger some technical selling and accelerate the slide further towards the 1.2300 round-figure mark en-route mid-1.2200s – support marked by 23.6% Fibo. level.
2. Fundamental Overview
Tuesday's US data showed that August Industrial Production and Manufacturing Production expanded more-than-expected at 0.6% and 0.5% monthly rate, respectively. Adding to this, Capacity Utilization jumped to 77.9% during the reported month and surprised markets to the upside but failed to impress the USD bulls. Meanwhile, the risk sentiment improved a bit during the US trading session on Tuesday after Saudi Arabia's energy minister said the kingdom has tapped inventories to restore oil supplies, which further dented the greenback's relative safe-haven status and provided an additional boost.
Despite the latest surge, the pair still seemed struggling to sustain above the key 1.2500 psychological mark and ticked lower during the Asian session on Wednesday. Investors now look forward to the latest consumer inflation figures from the UK, which might influence the Sterling and produce some short-term trading opportunities. The key focus, however, remains firmly on the highly anticipated FOMC monetary policy decision, expected to deliver a 25 bps rate cut at the conclusion of a two-day meeting this Wednesday.
The move is largely priced in the market and hence, the key focus will be on the accompanying monetary policy statement/upbeat economic projections. This will be followed by the post-meeting press conference, where comments by the Fed Chair Jerome Powell will be closely scrutinized for fresh clues over the central bank's near-term monetary policy outlook. Any hawkish, rather less dovish signals might be enough to trigger a fresh leg of a bullish USD move and prompt some long-unwinding trade around the major.
From a technical perspective, the pair has been showing some resilience below 38.2% Fibo. level of the 1.3178-1.1959, clearly suggesting that the near-term bias remains in favour of bullish traders. Hence, a follow-through buying interest has the potential to lift the pair further 50% Fibo. level resistance near the 1.2560-65 region, above which the momentum could further get extended beyond the 1.2600 round-figure mark, towards testing the next major confluence region near the 1.2700-20 region - comprising of 61.8% Fibo. level and the very important 200-day SMA.
On the flip side, any meaningful pullback now seems to attract some fresh buying interest around the 1.2415 region (38.2% Fibo.) and help limit the downside near the 1.2380 horizontal support. Failure to defend the mentioned levels might trigger some technical selling and accelerate the slide further towards the 1.2300 round-figure mark en-route mid-1.2200s – support marked by 23.6% Fibo. level.
2. Fundamental Overview
Tuesday's US data showed that August Industrial Production and Manufacturing Production expanded more-than-expected at 0.6% and 0.5% monthly rate, respectively. Adding to this, Capacity Utilization jumped to 77.9% during the reported month and surprised markets to the upside but failed to impress the USD bulls. Meanwhile, the risk sentiment improved a bit during the US trading session on Tuesday after Saudi Arabia's energy minister said the kingdom has tapped inventories to restore oil supplies, which further dented the greenback's relative safe-haven status and provided an additional boost.
Despite the latest surge, the pair still seemed struggling to sustain above the key 1.2500 psychological mark and ticked lower during the Asian session on Wednesday. Investors now look forward to the latest consumer inflation figures from the UK, which might influence the Sterling and produce some short-term trading opportunities. The key focus, however, remains firmly on the highly anticipated FOMC monetary policy decision, expected to deliver a 25 bps rate cut at the conclusion of a two-day meeting this Wednesday.
The move is largely priced in the market and hence, the key focus will be on the accompanying monetary policy statement/upbeat economic projections. This will be followed by the post-meeting press conference, where comments by the Fed Chair Jerome Powell will be closely scrutinized for fresh clues over the central bank's near-term monetary policy outlook. Any hawkish, rather less dovish signals might be enough to trigger a fresh leg of a bullish USD move and prompt some long-unwinding trade around the major.
Penafian
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