But first, here are the headlines you missed if you weren’t around during the Asian session:
Fresh Market Headlines & Economic Data:
- U.S. plans to slap aluminum tariffs on Canada
- White House trade adviser Navarro says trade deal with China is “over”
- Trump: Trade deal with China is “fully intact”
- Asian shares recover in volatile session over confusion in U.S.-China trade deal
- Australia’s flash manufacturing PMI up from 44.0 to 49.8
- Australia’s flash services PMI up from 26.9 to 53.2
- Japanese flash manufacturing PMI fell from 38.4 to 37.8 vs. 39.5 forecast
- BOJ core CPI up from -0.1% to 0.0% y/y
Upcoming Potential Catalysts on the Economic Calendar:
- German & French manufacturing and services PMIs due starting 8:15 am GMT
- U.K. flash manufacturing and services PMIs at 9:30 am GMT
- BOE Governor Bailey to testify at 9:45 am GMT
What to Watch: GBP/USD
Cable has formed lower highs and lower lows to cruise inside a falling channel on its 1-hour chart. Price seems to be in the middle of a correction and is currently testing the Fib retracement levels.The 50% Fib is right smack in line with the top of the descending channel near the 1.3500 major psychological level and a support-turned-resistance zone. Pound bears might be waiting right here, ready to push the pair back to the swing low or the channel bottom around 1.2250-1.2300.
The 100 SMA is safely below the 200 SMA to confirm that the downtrend is likely to resume. In addition, the 200 SMA lines up with the channel resistance to add to its strength as a ceiling.
Stochastic is already indicating overbought conditions or exhaustion among buyers, so sellers might be eager to regain the upper hand soon.Of course, this could depend on the outcome of the U.K. PMI readings from the manufacturing and services sectors. Both industries are expected to chalk up improvements for the current month, but disappointing results could still drag the currency south.
BOE Governor Bailey’s upcoming speech could add some excitement to GBP price action in the coming session as well. Note that a bit of risk aversion has been in play from the earlier trading session, which could mean more upside for the safe-haven dollar.
If you’re looking to trade this pair during the U.K. PMI releases, make sure you check the average GBP/USD volatility when it comes to setting entries and exits.