GBP/USD had another action-filled week amid Brexit headlines, weak data, and the Fed decision. What’s next? The Conservative Party Conference and PMI data stand out. Here are the key events and an updated technical analysis for GBP/USD.
Ahead of the Tory conference, former Foreign Minister Boris Johnson lashed out at the government and called it to scrap its plans. The EU ramped up its preparations, putting pressure on the Pound. UK GDP missed expectations with a downgrade of annual growth from 1.3% to 1.2% and the current account deficit ballooned over 20 billion pounds. The Fed raised rates signaled more, but the greenback initially dropped on the removal of the words “accommodative policy”. The greenback recovered on Powell’s upbeat message.
GBP/USD daily graph with resistance and support lines on it. Click to enlarge:
* All times are GMT
GBP/USD Technical analysis
Pound/dollar made an attempt to recover but hit the 1.3215 level mentioned last week. It then fell sharply and stopped only at 1.3000.
Technical lines from top to bottom:
1.3375 was a high point in July. It is followed by 1.3315 that capped the pair earlier that month.
1.3215 was the high point for the pair in mid-July and a lower high on the chart. The round number of 1.3100 supported the pair earlier in September.
The round number of 1.3000 is important after providing support to the pair in late September.
Below 1.3000 we find 1.2935, a high point in late August. 1.2865 separated ranges in late August. Further down, 1.2790 served as support late August and also beforehand.
1.2750 held the pair down when the pair was on the back foot. The current 2018 trough at 1.2660 is the next level.
1.2590 was a swing low in September 2017. Even lower, 1.25 is a round number and also worked as support in early 2017.
I remain bearish on GBP/USD
The Conservative Party Conference will be full of plots and hard-Brexit rhetoric. On this background, it is hard to see the pound recovering. In addition, fears of a cliff-edge Brexit will likely weigh also on the PMI data. The intention of the Fed to continue raising rates supports the greenback.
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