(MENAFN- DailyFX)
POUND STERLING TALKING POINTS
- EUR and USD favored against GBP .
- Spotlight on U.S. and EU economic data.
Advertisement GBP FUNDAMENTAL BACKDROP
Pound sterling is having a tough time this week against the U.S. dollar and euro respectively. The ECB Sintra Forum saw the Federal Reserve via Jerome Powell surprise markets on the hawkish side thus boosting the dollar . Yesterday, Russia withdrew troops from Ukraine as a“gesture of goodwill” leaving the euro bid in conjunction with looming ECB rate hikes to quell inflationary pressures in the eurozone. These fundamental headwinds left the pound weaker while UK economic data showed housing prices slipping in the month of June.
Brexit developments may also play a role in the pound although up until now we have not seen significant reactions within GBP crosses.
To close off the week, eurozone core inflation and U.S. ISM Manufacturing PMI will be in focus. Eurozone core inflation is estimated to come in higher than the previous release which could support further EUR upside. ISM data on the other hand is forecasted lower and could play into the hands of an already fearful market with regards to an impending recession.
GBP/USD & EUR/GBP ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
TECHNICAL ANALYSIS
GBP/USD DAILY CHART
Chart prepared by Warren Venketas , IG
Cable has been relatively muted but remains in it's recent consolidatory pattern as bears look to retest the 1.2080 (76.4% Fibonacci) level. We could see further downside towards the 1.1934 swing low but I am leaning towards some sort of bullish recovery medium-term (albeit incremental).
Key resistance levels:
- 1.2494
- 1.2400/50-day EMA (blue)/Trendline resistance (black)
- 20-day EMA (purple)
Key support levels:
- 1.2080
- 1.1934 (swing low)
EUR/GBP DAILY CHART
Chart prepared by Warren Venketas , IG
Daily EUR/GBP price action shows yesterday's long lower wick setting up the bullish bias for today as prices remain within the medium-term rising wedge formation (black). Technical analysis points to a pullback by the pound as the RSI reveals slowing upside momentum contradicting corresponding prices action (bearish divergence) however, timing divergence can be difficult.
Key resistance levels:
Key support levels:
- 0.8600/ Wedge support
- 0.8530
Contact and follow Warren on Twitter: @WVenketas
MENAFN01072022000076011015ID1104463433
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.