Daily Technical Analysis:
GBP/USD has tested SMA5 on Friday and there is 12 days lagging in SMA10 and 26 days lagging in SMA15. Market SMAs are squeezing and moving in bullish sequence, whereas GBP is moving between SMA10 and SMA15.
RSI is showing decreasing Bullish strength with 76% reading. RSI is now moving in uptrend with a slight downward direction above resistance (70%).
Upper, middle and Lower bands are moving upward direction with expended bands, providing support to bullish volatility. Market is moving between upper and middle band.
With Lutfi Magnet Theory market is 56% bearish, while with adjustments 175% Bearish. Lutfi magnet theory is showing bearish sentiments, While adjustments are suggesting there is due correction in GBP.
Concluding all Technical Analysis initial bias is bullish with correction, where it may attempt low at support level 1.6200, and break there may move downward to last week low at 1.6162. While on higher side break of daily pivot point at 1.6258, may attempt last week high at 1.6308.
GBP/USD edged higher to 1.6309 last week but faced some strong resistance from 1.6300 key resistance level and retreated. Upside momentum was also unconvincing. Initial bias is neutral this week and some more consolidations would be seen. Below 1.6163 will indicate short term topping and bring deeper decline. But after all, near term outlook stays bullish as long as 1.5912 support holds and we’d expect further rise ahead. Sustained break of 1.6300 will have larger bullish implication and would pave the way to 1.6618/6746 resistance zone next.
The pound extended gains against the U.S. dollar on Friday, rising to a five-month high, after data showed that U.K. public sector net borrowing rose less-than-expected in August, while investors eyed developments in Spain amid speculation of an imminent bailout.
Official data showed that U.K. public sector net borrowing rose to GBP12.4 billion in August, below the expected increase to GBP13.3 billion, following a reading of minus GBP1.9 billion the previous month.
Meanwhile, sentiment also strengthened after the Financial Times reported earlier that euro zone policymakers will unveil a financial bailout program for Spain as early as next week.
According to the newspaper, Spanish Economy Minister Luis de Guindos was in talks with European Commission authorities to facilitate a new rescue program that will be presented on September 27.
Risk appetite weakened broadly on Thursday, after a string of downbeat economic reports from the U.S., the euro zone and China sparked fresh concerns over the outlook for global economic growth.
Here is schedule for today’s important data:
GBP No Data: No major data is expected for the day.
USD No Data: No major data is expected for the day.
GBP/USD took a break from its impressive September rally, as the pair was unchanged over the week. GBP/USD closes around the 1.6330 line. UK releases were generally close to estimates, although Public Sector Borrowing was better than expected. In the US, the zigzagging continued, as Existing Home Sales looked sharp, but employment data continued to disappoint. This week has eight releases, with Current Account the highlight.
The US dollar corrected some of its huge losses in the aftermath of QE3, cutting a losing streak of 4 weeks. Last week US Existing Home Sales surprised traders with a leap to an annualized 4.82 million units from 4.47 million in July, confirming the growth trend in the housing sector. Meanwhile the number of weekly unemployment claims dropped to 382, a mere 3,000 drop from the week before indicating a slowdown in hiring and a struggling job market. In Europe, Spain enjoyed a successful bond auction. German Ifo Business Climate, CB Consumer Confidence US housing data and unemployment claims are the major market-movers on our calendar.
GBP/USD Last Week:
GBP/USD opened the week at 1.6220 with a thin range day of 60 pips and consolidated around 1.6162 and 1.6308. The pair first attempted low at 1.6162 on Thursday and then retraced back to high at 1.6308 on Friday. The pair closed the week at 1.6233.
GBP/USD opened today at 1.6235.