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Fundamental:
Those who were tuned in for Ben Bernanke’s Jackson Hole speech would be left
disappointed as the Fed did not commit to QE3. There is uncertainty in the
market whether quantitative easing will occur or not,nevertheless,it should
not affect this week’s outlook.
USD has been
declining since the past month,however,it is likely to remain on the upper
side of the bearish channel it is currently in. A breakout from the upper
channel line at 10,040 would signal a bullish rally, which could be bearish for
GBP/USD, provided GBP does not rally as well.
Trade numbers
for UK have been disappointing,with a £10 billion short-fall on the
goods/services balance.Exports to Europe are weakening as the UK tries to find
other markets.The country’s central bank will be expanding its QE program to
£425 billion,up from £375 billion.
The UK PMI for
August is 49.5, which is better than expected. Consumer goods producers have
also seen their outputs increased, so GBP has been appreciating. This is a good
sign for the economy, but the outlook is still poor as demand and investment
spending are weak.
Looking
at the 2H chart,we can see the GBP has been edging upwards lately.The 2 month
regression channel shows that GBP/USD has been bullish,even though it is
highly oscillating. From the 21st of August,it has stayed in the
upward level of the channel, where a lot of support and resistance lines exist.If the price breaks through from the 1.59
resistance level, a long trade may be favourable.On the other hand,if the
price breaks the support level of 1.5812,it could move in the lower level of
the channel,and even hit the lower end.Given the current circumstances,a
bullish rally is more likely.
Stochastics are
currently moving sideways. Even though they are currently in a bullish mode,
the signal is quite uncertain. MACD is still pointing higher, but its trend is
not as strong as before.
Therefore,
support and resistance lines should be given the most importance. Any
breakthroughs can trigger long or short trades.
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