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- At the end of last week, the GBP/USD attempted to rebound, but its gains did not exceed the 1.2998 level, and it is currently stabilizing near the support level of 1.2940 at the beginning of an important week, near its three-month low.
- According to forex trading, the British pound (GBP) gained ground against most major currencies on Thursday, despite the release of some UK preliminary Purchasing Managers' Index data that came in below expectations.
- According to the economic calendar results, both manufacturing and services indices fell short of expectations in October, although they remained above the 50 level, indicating expansion.
- The UK manufacturing sector declined from 51.5 to 50.3, below the expected 51.4 and reaching a six-month low. Meanwhile, the UK services sector fell from 52.4 to 51.8, failing to meet expectations of maintaining its previous level.
However, the clearly upbeat market sentiment coupled with expectations that the UK's upcoming autumn budget will boost investment in the UK has led to the pound gaining traction during the latter half of Thursday's European session.
Meanwhile, the US dollar (USD) lost some ground against most other currencies on Thursday despite the release of some better-than-expected US PMI data. The preliminary global PMIs for October from S&P showed that both the manufacturing and services sectors performed better than expected. The manufacturing index rose to 47.8 from 47.3, beating expectations of 47.4, while the services sector rose to 55.3 from 55.2, defying expectations for a fall to 55.0. Although the manufacturing index remained below the 50 level, indicating contraction, the services sector remained firmly in expansion territory.
However, the generally positive market sentiment has dampened demand for the US dollar, given its status as a safe haven currency. Also, the main driver of GBP/USD movement this week is expected to be the reaction to a slew of important US economic data led by the release of US jobs figures and the US Federal Reserve's preferred inflation reading.
In the UK, Chancellor of the Exchequer Rachel Reeves will unveil the first budget of the newly elected Labour government on Wednesday, which could be one of the most important financial announcements in the UK for years to come. Overall, she faces a tough task, with the IMF advising on increasing public investment, but also pushing for long-term reform of its finances. Reeves is willing to reform fiscal rules that could allow more borrowing for capital spending, while also likely to target investors to increase tax collections.
On another note, according to stock trading platforms, US stocks retreat. The S&P 500 closed flat on Friday, the Dow Jones Industrial Average fell 259 points and the Nasdaq 100 advanced 0.5% as declines in bank stocks offset gains in tech stocks. Particularly, the financial sector was particularly affected by concerns surrounding New York Community Bancorp, which saw its shares fall 8.2% after disappointing guidance. Bank of America and Wells Fargo fell 1.7% and 1.3%, respectively, while Morgan Stanley and Goldman Sachs dropped 2%. Conversely, big tech companies such as Microsoft, Alphabet, Meta and Amazon rose between 0.8% and 1.5% ahead of their upcoming earnings reports. Additionally, American depositary receipts for Nvidia and TSMC rose 0.8% and 6.9%, respectively, extending gains in the semiconductor sector. On the economic data front, the University of Michigan Consumer Survey indicated that both sentiment and expectations were revised higher, while inflation expectations were revised lower.
Overall, during the week, the S&P 500 and Dow Jones Industrial Average fell by 2.4% and 0.9%, while the Nasdaq posted slight gains.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Technical forecasts for the GBP/USD pair today:
Technically, my technical outlook for the GBP/USD pair remains bearish. The overall trend is still downward, and stability below the 1.2900 support level confirms the dominance of bears. Furthermore, the readiness for stronger losses if the important US economic data this week Favors further strengthening of bearish dominance. Currently, the closest support levels for GBP/USD are 1.2880 and 1.2750, respectively. Form the last level, technical indicators will move towards oversold levels. For bulls to break the trend, the pair must stabilize above the resistance of 1.3150 again.
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