Jump to content

GBP/USD recovery hopes appear dim after breaking June low


ArvinIG

126 views

The British pound attempts recovery after breaking June low; oil prices see no relief as global recession fears solidify and GBP/USD bulls need to recapture June low for reversal hopes.

1657169715927.png
Source: Bloomberg
 
 

Thursday’s Asia-Pacific outlook

Asia Pacific markets face a mixed open after stocks on Wall Street closed mostly higher, and the US dollar rose. The Federal Reserve's latest meeting minutes crossed the wires, showing that the FOMC remains committed to tackling inflation. The latest US economic data showed signs that inflation might indeed be easing, with the ISM’s PMI data for June showing that prices paid by firms have decreased, albeit only slightly.

Across the pond, in the United Kingdom, Prime Minister Boris Johnson’s position in Her Majesty’s Government weakened further after another round of resignations, this time among more junior cabinet members. The British pound traded at its lowest level since March 2020 against the US dollar. For now, Mr. Johnson’s fate is uncertain as rules would have to be changed to call another no-confidence vote, and there has been no indication so far that resignation is forthcoming.

The Australian dollar and New Zealand dollar also fell victim to the stronger dollar, with NZD/USD and AUD/USD trimming nearly 0.5% overnight. A staggering fall in commodity prices has pained the two currencies in recent weeks. This morning, Australia’s Ai Group Services Index for June fell to 48.8 from 49.2 in the prior month. Iron ore prices fell around 1% during US trading hours.

Oil prices fell again across the WTI and Brent benchmarks, with prices now below $100 per barrel as recession fears drag on demand expectations. Banks and analysts are starting to drop their year-end targets for the commodity after this week’s big drop, reversing lofty expectations for higher prices just a few weeks ago. Meanwhile, in Beijing, China, authorities are restricting access to many public venues to only those who are vaccinated.

Notable Events for July 7:

  • Japan – Foreign Bond Investment (02/JUL)
  • Philippines – Unemployment Rate (MAY)
  • Australia – Balance of Trade (MAY)

GBP/USD technical forecast

GBP/USD remains below its June swing low, but prices appear to be attempting to rebound, although modestly. The recent weakness following a break below Pennant support may continue if bulls can’t recapture that level. The RSI and MACD oscillators are negative, and technically, the cross looks primed for more weakness ahead.

GBP/USD 8-hour chart

1657169827094.png
Source: TradingView

Thomas Westwater | Analyst, DailyFX, New York City
07 July 2022 15:02

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

0 Comments


Recommended Comments

There are no comments to display.

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...