GBP / USD recovers from daily lows around 1.3750

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  • Market sentiment is pessimistic as investors weigh the economic outlook for the fourth quarter and the problems in US fiscal policy.
  • UK Treasury reveals £ 75bn budget, cut taxes on pubs and restaurants.
  • The UK economy will grow 6.5% by the end of the year.
  • Durable goods orders from the US were better than expected, but contracted.

The GBP/USD It was down during the American session, down 0.12%, trading at 1.3748 at the time of writing.

Factors such as month-end flows, portfolio reshuffle, economic growth concerns, and US fiscal policy issues kept investor sentiment negative, as evidenced by the decline in equity indices. US stocks Safe-haven currencies like the Japanese yen, Swiss franc, and US dollar benefit on a flight to safe-haven flows.

During the European session, Rishi Sunak, the finance minister, unveiled a £ 75 billion budget in which he cut taxes for pubs and restaurants, lowered tariffs on alcohol and increased support for the country’s poorest, he said in a statement about Parliament.

Furthermore, the UK economy contracted by almost 10% in 2020, but is forecast to grow 6.5% by the end of the year, according to the Office for Budget Responsibility (OBR). Furthermore, the OBR expects inflation to average 4%, double the Bank of England’s target, which the Bank of England has been aware of, as some politicians had raised concerns about high prices.

An absent economic record in the United Kingdom leaves GBP / USD traders in the dynamics and evolution around the dollar. Meanwhile, on the US economic docket, durable good orders for September contracted 0.4%, less than the 1.1% expected by analysts. On the other hand, Non-Defense orders, excluding aircraft, expanded by 0.8%, higher than the estimated 0.5%.

That said, the focus of GBP / USD traders is on the US Gross Domestic Product for the third quarter, which is expected to be 2.5%, to be released on Thursday.

GBP / USD Price Forecast: Technical Outlook
Daily chart

GBP / USD is in a slightly bearish trend, represented by the daily moving averages (DMA) above the spot price, except for the 50-day moving average at 1.3705 that was tested earlier in the day.

Also, the price action indicates that the selling pressure was increasing on the pair, but failed to break below the 50 DMA at the time.

The Relative Strength Index (RSI) is at 52, pointing to the downside, indicates that the downtrend could accelerate, but a piercing of the 50 midline is required to confirm the above.

A daily close below the 50 DMA could send GBP / USD down below 1.3700. Key support levels are ahead on the way south. The first support would be the April 12 low at 1.3669, followed by the October 12 low at 1.35.67, and then the 2021 low at 1.3411.

ADDITIONAL TECHNICAL LEVELS

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