(MENAFN- Daily Forex)
Before the end of last week's trading, and as the southeastern United States braced for Hurricane Helene, volatility in the foreign exchange market eased slightly as the market awaited the next major events that could move the market. The latest data indicated that a soft landing was realistic, while gains in US Stocks supported risk appetite. Accordingly, according to licensed trading platforms, the GBP/USD settled slightly above 1.3390, not much below its 31-month high. According to UoB, "Current price movements are likely to be the early stages of a ranging phase. In other words, we expect the pound to trade in a range for now, likely between 1.3200 and 1.3430."
According to the economic calendar results, Initial jobless claims in the United States fell to 218,000 in the last week from a revised 222,000 in the previous week and slightly below consensus expectations that did not indicate any significant deterioration in the labor market. Moreover, US durable goods orders remained unchanged in August compared to expectations of a 2.8% decline and after a revised 9.9% increase in the previous month.
On the other hand, US GDP for the second quarter remained unrevised at 3.0%. Overall, the data provided some reassurance about growth trends. However, potential support for the US dollar was noticeably limited. Especially, with financial markets continuing to price in a slightly more than 50% chance of a second consecutive 50 basis point US interest rate cut in November.
ING commented, "End-of-quarter flows may continue to provide some modest support for the dollar, but the positioning picture does not appear to be significantly skewed towards short dollar positions to justify large readjustments." It added, saying, "Ultimately, stronger US data is needed to convince markets to abandon 50-basis-point cut bets. Furthermore, that may not happen overnight, and there remains a significant risk that the dollar will remain constrained by the US elections."
Danske Bank expects upcoming US data to be crucial and sees limited scope for further US dollar losses. According to the bank, "This week's US jobs report remains the next key catalyst to watch. We think a catalyst is needed for the notable weakness in the US dollar in the near term, as Fed pricing is already relatively dovish, and arguably much of the dollar's decline has been priced in." UBS maintains a positive stance on the pound. According to Patrick Ernst, a foreign exchange market analyst, "We believe that higher yield differentials will support GBP/USD over time." He added, "We expect the pair (GBP/USD) to move gradually higher but note that temporary setbacks are possible after the recent rally."
However, HSBC remains skeptical about the outlook for sterling and does not expect levels above 1.30 to be sustainable, stating:“We believe sterling is in very good shape at the moment, with inflation falling behind other countries. The impact will fade next year, and we expect the Bank of England to cut interest rates more quickly than markets currently expect.”
According to Forex trading, the risk-sensitive pound found some support as market sentiment improved.
However, sterling's gains were limited by a decline in consumer confidence in the UK, as highlighted by the latest report from the British Retail Consortium.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Technical forecasts for the GBP/USD pair today:
According to the performance on the daily chart, the GBP/USD price is still on its broader upward path and breaking the resistance of 1.3400 strengthens the bulls' control over the trend. If the US dollar continues to weaken, the bulls may find a strong opportunity to move towards stronger peaks, the closest of which are currently 1.3465, 1.3520 and 1.3600, respectively. From now on, the technical indicators are towards strong overbought levels. On the other hand, and over the same period of time, the support levels of 1.3155 and 1.3000 will remain the most important to confirm the bears' control. Concurrently, the current hopes of the rise have evaporated. Furthermore, the GBP/USD price may remain on its current path until the markets react to the US jobs numbers and the statements of the US Federal Reserve Governor Powell.
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