Pair closed last week’s trading session lower mainly on US Dollar strength. Better than expected economic releases in the US and hawkish comments from FED’s Jerome Powell, saying that he feels uncomfortable about inflation acceleration, were more than enough to push the pair lower. From the EU side, the lack of central banks’ comments and the lack of high impact economic releases kept the Euro floating around the same levels.
As for this week, traders will be focusing on ECB meeting and press conference. It is not expected any change of policy in this meeting, although the central bank’s comments on future policy and on delta variant infections could weight on the pair’s exchange rate. Traders will also keep their eyes on the delta variant fast spreading in both the EU and US. Fears for additional restrictions will weight negative on both economies and could keep central banks’ comments on hold for now.
On the economic calendar we have on Tuesday German producer price index pointing lower at 1.2% On Thursday ECB minutes and interest rate will be released, EU consumer confidence expected higher at -2.5% On Friday, German Markit manufacturing PMI is expected lower at 64.1 Markit PMI composite higher at 61 European Markit PMI composite higher at 60 and US Markit manufacturing PMI lower at 62.
Technically, the picture is negative. Pair closed below (61.8%) at 1.1805. In this week’s trading session if the pair continues on the downside, we are expecting to test last week’s low at 1.1776, a break below this level will open the road to 1.1700 alternatively if resumes upside and close above 61.8% on the 4H chart could accelerate gains toward 1.1970 Our traders kept open their long positions at 1.1970 and 1.1865 targeting profits above 1.2240 we are expecting more aggressive long positions at 1.1700 alternatively a break on the upside could bring short-sellers around 1.2070 targeting profits at 1.1750
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session lower on many reasons like, better than expected US economic releases, FED’s Powell’s comments about US inflation added downside pressure on pair and fears and uncertainty on UK’s 19th of July reopening plan. Even though at the moment the 19th of July is officially the day when full business reopening as per the UK government, doubts about the continuation of the reopening still weighed negatively on GBP. The fast-spreading of the delta variant with the rise in infections manage to keep the pair lower. On the other hand, we have seen another BOE MP comment that inflation can support the BOE’s decision to stop its bond-buying program and hike interest rates. He is the second MP following a hawkish stance in the last 2 months.
As for this week, traders will be closely monitoring the UK reopening procedures, any unexpected restrictions in both the UK and US due to delta variant spreading and inflation numbers in both the UK and US that could trigger more central banks’ members to follow a hawkish stance.
In the economic calendar, we have on Monday, a speech from BOE member Haskel. On Thursday, Gfk consumer confidence expected unchanged at -9. On Friday, retail sales expected higher at 0.5% and Markit services PMI lower at 62.
Technically the pair is negative after last week’s sharp downside move and close just in line with last week’s lower level. In this week’s trading session if the pair continue to trades on the downside, a close below last week’s lower level of 1.3730 will keep the picture negative and open the road to 1.3676 (100%) Alternative if the pair resumes the upside first level to be retested is 1.3900 (61.8%). Our traders kept open their long positions at 1.4000 and 1.3837 targeting profits at 1.4200 We are expecting more aggressive buyers at 1.3700
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