GBPUSD ANALYSIS- CENTRAL BANKS TAKES CENTRE STAGE
Investors were risk off on the market as they digested a number of interest rate reports from Central Bank meetings. The Swiss National Bank and Bank of England took centre stage ahead of key US economic data. There will be a release of US Initial Jobless Claims, and Philly Fed Manufacturing index data along with Existing Home sales. The European Central Bank’s President Christine Lagarde will be speaking later in the day.
The GBPUSD dropped by -0.56% following unchanged interest rates by the BoE. The Bank of England kept rates unchanged at 5.25% contrary to investor sentiment of a 25bps hike today, as the central bank takes a cautionary stance following Wednesday’s softer inflation data. The UK inflation rate slipped for a third month straight down to 6.7% in August from 6.8% in July, recording the lowest in 18 months. The US Federal Open Market Committee also maintained their rates unchanged late Wednesday evening at 5.25% as expected though the dollar held to its gains on the backdrop of strong inflation data. Investors cautiously
await the US Jobs data for clues on future policy direction and Traders should pay close attention.
Daily Chart Analysis
The GBPUSD breached the 1.23081 low, which coincided with sell-side liquidity, making it an intermediate-term level for sellers’ profit targets. A further drop below that level is possible towards the 1.21905 which
coincides with a Daily Sell side Liquidity, on March 24, 2023. I would like to see sellers attack that near-term support in the near term before we experience new targets. Liquidity resting below that near-term support corresponds with a Fair Value Gap between 1.21672 and 1.21279 range.
However, if the market retreats above the 1.23081 level, bulls would be looking to attack the buy-side liquidity above the 1.2423 level. As we go into the close of the week, I will be closely monitoring how the DXY performs for any clues for short-term opportunities and likewise, pay close attention. There will be a release of UK Retail sales data early Friday morning which could influence GBPUSD performance in the near term.
