Daily Technical Analysis:
GBP/USD has tested SMA5 and SMA15 yesterday. Market SMAs are squeezing and contracting in bullish sequence, whereas GBP is moving between SMA5 and SMA15.
RSI is showing decreasing Bullish strength with 65% reading. RSI is now moving in downtrend with a downward direction below resistance (70%).
Upper band is moving straight, while middle and Lower bands are moving upward direction with squeezing bands. Market is moving between upper and middle band.
With Lutfi Magnet Theory market is 89% bearish, while with adjustments 74% Bearish. Lutfi magnet theory and adjustments are showing bearish sentiments.
Concluding all Technical Analysis initial bias is Neutral, where break of yesterday’s low at 1.6136 may turn the biasness to bearish and move downward to middle band at 1.6093. While on higher side sustainable move above SMA5 at 1.6192 may attempt high at weekly magnet 1.6222.
The British Pound was lower against the U.S. Dollar on Wednesday after a Federal Reserve governor blasted the U.S. central bank’s decision for QE3 despite weak new homes sales weighing on the greenback.
In a report, the Census Bureau said that new home sales fell to a seasonally adjusted annual rate of 373K, from 374K in the preceding month whose figure was revised up from 372K. Analysts had expected new home sales to rise to 380K last month.
Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won’t work in that households and businesses would rather pay down debts than take on new leverage. Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing.
Here is schedule for today’s important data:
Current Account at 01:30pm. This key release disappointed in the previous reading, posting a wider deficit than forecast. The markets are bracing for an even wider deficit in September, of -12.2 billion pounds.
Final GDP at 01:30pm. Final GDP has posted two consecutive declines of 0.3. The markets are predicting more bad news, with an estimate of a 0.5% drop in September.
US Core Durable Goods Orders at 05:30pm. US Core Durable Goods, excluding transportation declined unexpectedly in July, dropping 0.4% while predicted to gain 0.5%. This reading followed a 2.2% plunge in the previous month. Meanwhile headline figure showed a 4.1% leap after a 1.6% increase in June driven by civilian aircraft spending. Disregarding the core figure, there is an improvement in US economic activity. A 0.5% gain is anticipated this time.
US Unemployment Claims at 05:30pm. The number of Americans seeking unemployment benefits dropped less than predicted last week with 382,000 claims, down 3,000 from the preceding week. The labor market added only 96,000 jobs last month, below the 141,000 in July suggesting weak hiring. Analysts believe unemployment and sluggish growth will continue to deteriorate in the coming months. Another drop to 377,000 is expected now.
US Pending Home Sales at 07:00pm. Pending home sales reached a two year high in July jumping 2.4% to 101.7, after a 1.1% decline in June. The reading was above predictions giving further evidence to the upward trend in the housing sector. Home prices also show a consistent rise aided by the boost in sales. The number of homes for sales decreased 24% in the past year. If the current pace of sales continues, the supply of houses will exhaust in 6.4 months. A decline of 0.4% is forecasted now.
GBP/USD opened yesterday at 1.6184. The pair first attempted high at 1.6207 and then retraced back to low at 1.6136. The pair closed the day at 1.6163.
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