GBPUSD Downside Movement Accelerates

Despite impressively strong performances from the UK economy last week, downside movement in the GBPUSD accelerated with the pair declining by over 200 pips. The latest UK Construction PMI was recorded at its highest in seven months, with this being subsequently followed by Wednesday’s news that UK Services growth had reached a 10 month high. Further positive news included The Office for National Statistics (ONS) revising upwards the estimates for UK GDP growth, as well as a report showing that the UK had moved up the global rankings in an annual survey by the World Economic Forum (WEF).

Nonetheless, a YouGov poll indicating that Yes and No votes for a Scottish referendum had narrowed raised fears of political instability within the United Kingdom. This encouraged a sharp decline in the GBPUSD. Additionally, awareness from investors that regardless of impressive UK fundamental performances, the BoE were still unlikely to raise rates added to the downward momentum.

There is a high quantity of UK economic data released on Tuesday. This includes Trade Balance, Manufacturing and Industrial Production and the NIESR GDP estimate of August. Additionally, there are reports of plans for a speech from Governor Carney also taking place on the same day. In regards to the upcoming Scottish referendum, the prospect of an independent Scotland is clearly gaining momentum and causing unease among investors. An independent Scotland had not been priced into the markets before, but is certainly having an impact now.

From a technical standpoint on the Daily timeframe, the GBPUSD looks very bearish. The Cable is now teasing the conclusion of a downward channel which has controlled the pair’s direction since late June, with further moves south likely accelerating when the channel is confirmed as having ended. In which case, support can be found at 1.6271 and 1.6209.

Source:: Downside GBPUSD movement accelerates

About the Author
Jameel Ahmad is the Chief Market Analyst at Forex Time (FXTM). He holds a BA (Hons)degree in Business Studies with Accountancy & Finance from the University of the West of England, Bristol, UK. In his early career, Jameel worked on a variety of projects in the Middle East, Europe and United States, which allowed him to develop a detailed understanding of banking, international finance and asset management. Later on he worked as a strategic research analyst for an international brokerage firm, where he gained invaluable experience in writing FX commentaries and fundamental analysis on distinguished financial websites.

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