Fundamental
Overview
The USD has been weakening
across the board ever since Fed’s Williams endorsed a December rate cut. The
greenback then extended the losses further last week following soft ADP data
and a Bloomberg report saying that Hassett emerged as the frontrunner for the
Fed Chair position.
The probability for a
December cut is now at 87%, which makes it a done deal. We won’t get much data
before the FOMC meeting, so the focus will likely be mainly on jobless claims
and ADP data, which haven’t been showing any strong improvement.
Weak data should keep
weighing on the greenback, while strong data could provide some short-term reprieve.
At the end of the day though, it’s all about the FOMC decision now and the
following NFP and CPI reports.
On the GBP side, the market
sees a 90% probability of a rate cut this month and a total of 62 bps of easing
by the end of 2026 following soft UK data. The Autumn Budget announcement was
well received with the pound strengthening across the board, even though
eventually it gave back the gains.
GBPUSD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that GBPUSD couldn’t break above the resistance around the 1.3250 level and
pulled back a bit. If the price gets there again, we can expect the sellers to
step in with a defined risk above the resistance to position for a drop into
the trendline. The buyers, on the other hand, will want to see the price
breaking higher to increase the bullish bets into the 1.3370 level next.
GBPUSD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that the price broke below the upward trendline, opening the door for a
bigger pullback into the 1.3125 level. If the price gets there, we can expect
the buyers to step in with a defined risk below the level to position for a
rally into the 1.3250 resistance. The sellers, on the other hand, will look for
a break lower to increase the bearish bets into the trendline around the 1.3070
level.
GBPUSD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here but given the more bearish short-term bias, the sellers
might wait for the price to come into the recent swing high at 1.3220 to
position for a drop into the 1.3125 level with a better risk to reward setup.
The buyers, on the other hand, will look for a break higher to target a break
above the 1.3250 resistance. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US ADP and the US ISM Services PMI. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the
University of Michigan Consumer Sentiment report.
This article was written by Giuseppe Dellamotta at investinglive.com.
Goods and Services Balance: +$2.49bn vs +$2.78bn prior
Net Primary Income: -$18.69bn vs -$18.99bn prior.
Terms of Trade: +0.3% q/q.
This is the worst reading since 2016. The ABS notes that the fall was led by the net secondary income deficit widening, though this was partially cushioned by an improvement in net primary income.
For traders eyeing tomorrow’s Q3 GDP print, the key takeaway here is the net export contribution. The balance on goods and services is expected to detract 0.1 percentage points from the headline growth figure. It’s not a massive drag, but it’s a headwind nonetheless for the Australian economy. The consensus tomorrow is +0.7% q/q and +2.2% y/y.
This article was written by Adam Button at investinglive.com.
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