GBP/USD Climbs To Two-Week Highs Despite Weak UK Data
Alex Boltyan | Sep 12, 2022 05:15PM ET
The Cable started the week strongly amid a better mood across the markets. The GBP/USD pair gapped higher and stretched to its highest level since Aug. 30 despite weaker-than-anticipated U.K. data.
At the time of writing, the GBP/USD pair is trading at the 1.1680 area, posting a 0.8% daily gain, having set a high of 1.1704 earlier on the day.
UK GDP grew slower than expected by 0.2% in July, below the market consensus of 0.5% but bounced after a contraction of 0.6% in June.
At the same time, Industrial Production decreased by 0.3%, while the market expected an expansion of 0.4%, and Manufacturing Production expanded at a slower-than-expected rate of 0.1%, below the consensus of 0.6%.
Other data showed that the Index of Services decreased by 0.2%, while the U.K. Trade Balance deficit was confirmed at £7.79 billion as expected.
Still, the pound managed to post daily gains for the second session in a row as the greenback staged a downward correction across the board.
The U.S. dollar, measured by the DXY index, fell to its lowest in two weeks at 107.81 before trimming losses.
Investors focus on U.S. CPI figures, which will be released on Tuesday, as they could play an essential role in the FOMC interest rate decision next week.
The WIRP tool points to 90% odds of a 75 bps rate hike by the Fed, while the BoE’s next meeting has been postponed to Sept. 22 in the light of the Queen's death.
Investors are betting on a 60% probability of a 75 bps increase in that meeting.
The short-term technical outlook for the GBP/USD pair remains bearish, although it has improved according to the daily chart.
The RSI gained a significant positive slope, while the MACD crossed above its signal line and printed a green bar for the first time since mid-August.
On the upside, the next critical resistance stands at the 20-day SMA, currently at 1.1710. A break above could pave the way for an advance towards the 1.1750 zone and then to the 1.1800 psychological mark.
On the downside, the immediate support could be found at the 1.1600 level. A loss of this area would expose the 1.1500 zone, and the cycle low hit on Sept. 7 at 1.1404.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.