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GBPUSD Bottomed Out ? FOMC Minutes Review


Aug.18.2016

GBPUSD Bottomed Out ?

Both US dollar and the British Pound are sure under pressure but the GBP could be defeating Ms. USA in the next dance battle. Has GBPUSD bottomed out ? Let's do a full-on Invest Diva Diamond Analysis to find out!

GBPUSD Bottomed Out FOMC Minutes Review GBPUSD Bottomed Out FOMC Minutes Review

 

GBPUSD Bottomed Out ? Technical Analysis

The GBP/USD pair seems to have bottomed out at 1.2880 as I shared with the Invest Diva insiders and Tweeted on Tuesday. The next resistance/ pivot level lays on the 23% Fibonacci level at 1.3350 and from there we could see a momentum change towards 1.3625 and 1.3860. The 1.2880 level was the all time low for the pair and the UK needs to get in deep trouble for the pair to break below that at this point.

GBPUSD bottomed out GBPUSD bottomed out?

Takeaways from FOMC Minutes | US Dollar Fundamentals

We had the FOMC meeting minutes Released on Wednesday, revealing some voting Federal Reserve policymakers expect that a U.S. interest rate hike will be needed soon, as soon as September!

HOWEVER, there is general agreement that more data is needed before such a move.

The minutes showed that Janet Yellen and her crew were generally upbeat about the U.S. economic outlook and labor market, but several members said a slowdown in the future pace of hiring would argue against a near-term hike.

Hint? Look at jobs reports.

 

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Forex Coffee Break Trading Education (1)

The market reaction indicated that many investors are still betting rates will remain at ultra-low levels, and that could be behind the USD indecisiveness after the release.

Coming up...

We still have the US Unemployment Claims to look forward to on Thursday released at 12:30 PM GMT expected to have risen from last week.

A better than expected result could give the USD an edge with GBP/USD pulling back down.

For the second quarter of the year, employment is expected to have increased by only 0.6% while the unemployment rate is expected to have fallen from 5.7% to 5.3%.

What else is behind Dollar's weakness?

While a (lack) of fed rate hike and investors being on summer vacation are cited as likely reasons why, there is another scenario as well.

According to Marc Chandler, global head of currency strategy at Brown Brothers Harriman, a rash of maturing Treasurys will leave foreign investors with billions in cash looking for a home (translate: a ton of USD supply).

And given the rising cost of hedging dollar-denominated investments, they might not be as eager to reinvest that money in the U.S. (Translate: lack of demand).

And thus the weakness in Ms. USA.

 

Trading Strategy

If you are team # GBPUSD bottomed Out , you might want to take it one Fibonacci level at a time.

More on Economic Calendar

Thursday

Sydney session: Started with Australia’s employment change and Labour Force released at 1:30 AM GMT

London Session: Moving forward we have Euro-Zone Current Account for June released during the London session at 8 AM GMT which summarizes the flow of goods, services, income and transfer payments in and out of the Euro-zone nations to other countries. Next the UK will release their Retail Sales  at 8:30 AM GMT and Euro-Zone Consumer Price Index will be out at 9 AM.

New York Session: The market moving event during the New York session is the US Initial Jobless Claims released at 12:30 PM followed by their Leading Indicators at 2 PM which is a composite index designed to forecast trends in the overall economy, expected to remain unchanged at 0.3%. A better than expected outcome the US data could strengthen the weak US dollar.

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Friday

Asian session: Japan will release their All Industry Activity Index for June.

London Session: Moving forward the UK will release their Public Sector Net Borrowing for July at 8:30 AM GMT

New York Session: Canada’s Consumer Price Index will take the stage at 12:30 PM GMT to create volatility in the Loonie crosses. This key gauge for inflation in Canada is expected to have dropped to 1.3% from previous reading of 1.5% on a year on year basis. A better than expected could bring the power back to the Loonie and end the trading week on a high note

 

Here are Invest Diva's calculations for important GBP/USD  approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.2880 1.2880 1.3625
1.2650 1.3350 1.3860

 

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 xoxo

Kiana 喜愛成
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