#GBPUSD @ 1.06937 resumes downside towards the all-time low after a corrective bounce. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• GBP/USD resumes downside towards the all-time low after a corrective bounce.
• BOE refrains from early intervention, UK government rules out scope for canceling mini-budget.
• Pessimism in the UK contrasts with the hawkish Fedspeak, firmer yields to favor US dollar.
• Bears can keep reins and can dig deeper, US Durable Goods Orders, CB Consumer Confidence eyed.

The pair currently trades last at 1.06937.

The previous day high was 1.1274 while the previous day low was 1.084. The daily 38.2% Fib levels comes at 1.1006, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1108, expected to provide resistance.

GBP/USD fades bounce off the all-time low marked on Monday, easing to 1.0670 during the early Asian session on Tuesday, as pessimism surrounding the UK remains intact. Also exerting downside pressure on the Cable pair is the hawkish Fedspeak ahead of the week’s key US data.

Be it the newly formed British government or the Bank of England (BOE), both disappointed the GBP/USD traders the previous day by turning down the hopes of meddling to defend the British Pound (GBP).

When asked whether the government is planning to change the measures set out in the mini-budget, British Prime Minister Lis Truss’ spokesman responded by simply saying “no,” as reported by Reuters. The diplomat also mentioned that it is important that BOE independence remains while adding that we don’t comment on interest rates.

On the other hand, the BOE stated that they are monitoring developments in financial markets very closely in light of the significant repricing of the financial assets. The BoE further noted that they welcome the government’s commitment to sustainable economic growth and the role of the Office for Budget Responsibility.

Elsewhere, The UK Times stated that Labour has surged to its largest poll lead over the Conservatives in more than two decades, with voters turning against (UK Chancellor) Kwasi Kwarteng’s tax-cutting budget. A YouGov poll for The Times today puts Labour 17 points clear of the Tories — a level of support not seen since Tony Blair won his landslide victory in 2001.

On the other hand, Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Even so, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Amid these plays, the yields rally as the traders sought premium to hold riskier assets while the equities dropped, which in turn helped the US dollar to remain firmer.

Moving on, headlines from the UK will be crucial for the short-term direction of the GBP/USD pair. However, major attention could be given to the US CB Consumer Confidence for September and Durable Goods Orders for August will be crucial to watch for intraday guidance. That said, the bears are likely to keep the reins and may dominate further if the scheduled US data offers a positive surprise.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Unless crossing a previous support line from May, around 1.1270-80 by the press time, GBP/USD remains vulnerable to dropping towards the record low.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.0682 at the time of writing. Pair opened at 1.086 and is trading with a change of -1.64% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.1475, 50 SMA 1.1808, 100 SMA @ 1.2045 and 200 SMA @ 1.2654.

The previous day high was 1.1274 while the previous day low was 1.084. The daily 38.2% Fib levels comes at 1.1006, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.1108, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.0708, 1.0557, 1.0274
• Pivot resistance is noted at 1.1143, 1.1426, 1.1577

[/s2If]
Join Our Telegram Group