GBP/USD – Eyes inverse head and shoulder neckline
Cable dipped to a low of 1.3034 yesterday before broad based USD selling ensured a quick recovery of losses and a move higher to 1.3135 levels. Yesterday’s gains have been extended in Asia, with the bird now hovering around 1.3164 levels.
Eyes CBI total trends figure
Confederation of British Industry (CBI) Trends Total Orders number for August is seen coming-in at -10 as opposed to previous figure of -4. This means another month of weak manufacturing activity and the blame once again would be put squarely on the shoulders of Brexit vote.
However, it is worth noting that manufacturing has been in recession well before the Brexit vote happened. Nevertheless, weak data would reinforce expectations that BOE would hit the zero lower bound by year end. Consequently, Cable could feel the heat, although for that the figure would have to be worse than the consensus estimate. A Positive surprise could strengthen the pace of the corrective rally in Cable.
Technicals – Inverse Head and Shoulder on hourly
The neckline resistance is seen around 1.3220 levels
Pair’s rebound from Friday’s low of 1.3023 if followed by a break above 1.3185 (Aug 19 high) would open doors for a test of inverse head and shoulder neckline of 1.3220
Bulls should watch out for a failure at 1.3185 as such a move if followed by a violation at the daily low of 1.3128 levels would open doors for a more pronounced sell-off to 1.3050 levels
A day end close above 1.3220 would expose 1.3315 levels
Eyes CBI total trends figure
Confederation of British Industry (CBI) Trends Total Orders number for August is seen coming-in at -10 as opposed to previous figure of -4. This means another month of weak manufacturing activity and the blame once again would be put squarely on the shoulders of Brexit vote.
However, it is worth noting that manufacturing has been in recession well before the Brexit vote happened. Nevertheless, weak data would reinforce expectations that BOE would hit the zero lower bound by year end. Consequently, Cable could feel the heat, although for that the figure would have to be worse than the consensus estimate. A Positive surprise could strengthen the pace of the corrective rally in Cable.
Technicals – Inverse Head and Shoulder on hourly
The neckline resistance is seen around 1.3220 levels
Pair’s rebound from Friday’s low of 1.3023 if followed by a break above 1.3185 (Aug 19 high) would open doors for a test of inverse head and shoulder neckline of 1.3220
Bulls should watch out for a failure at 1.3185 as such a move if followed by a violation at the daily low of 1.3128 levels would open doors for a more pronounced sell-off to 1.3050 levels
A day end close above 1.3220 would expose 1.3315 levels
