#GBPUSD @ 1.17989 -imp levels: records marginal losses of 0.23% on Wednesday, trimming some of Tuesday’s gains.

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• GBP/USD records marginal losses of 0.23% on Wednesday, trimming some of Tuesday’s gains.
• Market participants are “laser-focused” on Friday’s US Fed Jerome Powell speech.
• US Pending Home Sales shows the housing market deteriorating, while Durable Good Orders stood still.

The pair currently trades last at 1.17989.

The previous day high was 1.1878 while the previous day low was 1.1717. The daily 38.2% Fib levels comes at 1.1817, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1779, expected to provide support.

The British pound erases Tuesday’s gains and drops, towards the 1.1800 figure, amidst a slightly upbeat mood, with traders being cautious ahead of the Jackson Hole Symposium, with market players’ eyes “laser-focused” on Fed chief Jerome Powell’s speech. At the time of writing, the GBP/USD is trading at 1.1803.

On Wednesday, the GBP/USD opened nearby daily highs around 1.1830 but dropped to the lows of the day at 1.1755, an hour before Wall Street opened, with US economic data hitting newswires. The lack of the UK’s economic releases will keep GBP/USD traders adrift to US dollar dynamics.

In the meantime, the US Dollar Index resumed its upward trajectory, though marginally up by 0.03%, at 108.523, while US T-bond yields rose. US economic data revealed during the last couple of weeks has been mixed, though in tone with an ongoing deceleration of the US economy.

Before Wall Street opened, US Pending Home Sales dropped to their lowest levels since the Covid-19 pandemic began. On its annual reading, collapsed -19.9%, less than -22% drop, while on a month-over-month, fell -1%, vs. -4% forecasts.

Earlier, Durable Good Orders for July remained unchanged at 0% MoM, missing estimations, but June’s reading was upward revised to 2.2%, showing consumer resilience. Orders excluding Defense and Transportation rose by 0.4%, higher than estimates of 0.3%.

Even though US data was dollar positive, the GBP/USD recovered some ground, lifting towards the 1.1817 area, current price levels, given that around 14:00 GMT, the British pound was trading sub 1.1800.

Elsewhere, late on Tuesday, the Minnesota Fed President Neil Kashkari crossed wires. Kashkari said that inflation is very high, and is the Fed’s job to curb it. He emphasized the need to tighten monetary policy and added that they (the Fed) could only relax on rate increases when they see compelling evidence of inflation heading toward 2%.

On the UK side, given that the country is reaching record energy prices and double-digit inflation levels, it would likely keep the Sterling downward pressured. Additionally, with elections coming on September 5, uncertainty about a new Prime Minister keeps market participants uneasy. Therefore, further British pound weakness is expected, despite further rate hikes by the Bank of England.

In the meantime, JP Morgan Analysts foresee the pound would hit 1.14 “if gas prices continue to do what they are doing,” as said Sam Zief, head of global FX strategy at JP Morgan.

The UK economic docket will feature the CBI Distributive Trades on Thursday. In the US, the calendar will reveal the GDP growth rate for the second quarter, Initial Jobless Claims, and the Kansas City Fed Manufacturing Index for August.

The GBP/USD trades below the midline of a descending channel drawn from late May, while the 20-DMA crossed under the 50-DMA, signaling that sellers are gathering momentum. Worth noting that if the GBP/USD records a daily close below the July 14 cycle low at 1.1759, it could open the door for a YTD low test at 1.1716. Otherwise, it would open the door for a consolidation in the 1.17601.1878 area, ahead of the Bank of England’s next monetary policy decision.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.1803 at the time of writing. Pair opened at 1.1837 and is trading with a change of -0.31 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.2079, 50 SMA 1.2078, 100 SMA @ 1.2343 and 200 SMA @ 1.286.

The previous day high was 1.1878 while the previous day low was 1.1717. The daily 38.2% Fib levels comes at 1.1817, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1779, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.1744, 1.165, 1.1583
• Pivot resistance is noted at 1.1904, 1.1971, 1.2065

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