GBP/USD surges towards 1.2080 after mixed US data

  • GBP/USD is moving steadily towards the confluence/20-50 DMA around 1.2110.
  • US industrial production surprises to the upside, while housing data continues to deteriorate.
  • Employment figures in the UK were better than expected, reinforcing the case for a 50 basis point Bank of England rate hike.

The GBP/USD It breaks three days of losses and approaches 1.2100 as the USD begins to weaken, in the middle of the American session, courtesy of recession fears resurfacing with US data showing signs of economic slowdown.

GBP/USD is trading at 1.2081, having hit a daily low of 1.2007, during the European session, but recovered on modest UK jobs numbers and reclaimed the 1.2050 area.

In terms of data, the US Federal Reserve reported that July industrial production rose 0.6% mom, supported by motor vehicles, driven by easing supply chain disruptions. Prior to the Wall Street open, July home building permits and housing starts plummeted, signaling the continued deterioration of the housing market, spurred on by rising mortgage rates.

In addition, the New York Fed’s Empire State Manufacturing Index for August fell into contraction territory on Monday, coming in at -31.1, below the 5 estimate.

GBP/USD reacted to this, breaking above the 20-day EMA, extending its gains and reaching a daily high at 1.2117.

On the UK side, the employment data was better than estimated, with a change in the applicant count, which fell by 10,000, better than the estimated 32,000, while the unemployment rate stood at 3.8 %. Despite data showing signs of a robust labor market, the Bank of England is expected to raise rates at its next meeting by 50 basis points, ignoring projections that the UK economy could slip into recession. by the end of the year.

On the other hand, the political spectrum has not been a driver of the British pound. However, the upcoming elections in September could increase the volatility in GBP/USD, and depending on who is elected as Prime Minister, we will probably see the first reaction of the pair.

What must be considered

On Wednesday, the UK economic calendar will see the release of the Retail Price Index and consumer and producer inflation figures. In the United States, retail sales for July will be published, along with the Minutes of the last FOMC meeting and the Fed’s speeches.

GBP/USD key technical levels

GBP/USD

Panorama
Last Price Today 1.2082
Today’s Daily Change 0.0028
Today’s Daily Change % 0.23
Today’s Daily Opening 1.2054
Trends
20 Daily SMA 1.2104
50 Daily SMA 1.2129
100 Daily SMA 1.2415
200 Daily SMA 1.2905
levels
Previous Daily High 1.2148
Previous Daily Minimum 1,205
Previous Maximum Weekly 1.2277
Previous Weekly Minimum 1.2048
Monthly Prior Maximum 1.2246
Previous Monthly Minimum 1,176
Daily Fibonacci 38.2% 1.2088
Daily Fibonacci 61.8% 1.2111
Daily Pivot Point S1 1,202
Daily Pivot Point S2 1.1986
Daily Pivot Point S3 1.1922
Daily Pivot Point R1 1.2119
Daily Pivot Point R2 1.2183
Daily Pivot Point R3 1.2217

Source: Fx Street

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