24 Jul 2014
GBP/USD punished and through key supports
FXStreet (Guatemala) - GBP/USD is trading at 1.6980, down -0.37% on the day, having posted a daily high at 1.7055 and low at 1.6966.
GBP/USD is being punished and broke through the psychologically important and 1.7000 level. Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank explained that today’s retail sales release was disappointing, dropping –0.1%m/m ex auto and up only 4.0%y/y ex auto, with a downward revision to the May data. "This, in addition to yesterday’s BoE minutes, which were less hawkish than expected, have markets concerned leading into the release of Q2 GDP on Friday. Governor Carney’s message yesterday was that the UK expansion is strong, rate hikes are approaching but that these are likely to be slow and cautious and ultimate bring rates to lower levels than we would see historically. The options market is pricing in increased risk of near-term GBP downside, as risk reversals have collapsed over the last several weeks. This disconnect is unusual for GBP and we see it as a near-term warning of building GBP downside pressure.
GBP/USD Levels
Spot is presently trading at 1.6980, and next resistance can be seen at 1.7012 (Hourly 20 EMA) and 1.7017 (Weekly Classic S1). Support below can be found at 1.6966 (Daily Low), 1.6949 (Weekly Classic S2), 1.6941 (Daily Classic S3), 1.6861 (Weekly Classic S3) and 1.6841 (Daily 100 SMA).
GBP/USD is being punished and broke through the psychologically important and 1.7000 level. Camilla Sutton, CFA, CMT, Chief FX Strategist at Scotiabank explained that today’s retail sales release was disappointing, dropping –0.1%m/m ex auto and up only 4.0%y/y ex auto, with a downward revision to the May data. "This, in addition to yesterday’s BoE minutes, which were less hawkish than expected, have markets concerned leading into the release of Q2 GDP on Friday. Governor Carney’s message yesterday was that the UK expansion is strong, rate hikes are approaching but that these are likely to be slow and cautious and ultimate bring rates to lower levels than we would see historically. The options market is pricing in increased risk of near-term GBP downside, as risk reversals have collapsed over the last several weeks. This disconnect is unusual for GBP and we see it as a near-term warning of building GBP downside pressure.
GBP/USD Levels
Spot is presently trading at 1.6980, and next resistance can be seen at 1.7012 (Hourly 20 EMA) and 1.7017 (Weekly Classic S1). Support below can be found at 1.6966 (Daily Low), 1.6949 (Weekly Classic S2), 1.6941 (Daily Classic S3), 1.6861 (Weekly Classic S3) and 1.6841 (Daily 100 SMA).