A lack of fresh catalysts translated to a bit of dollar weakness in today’s Asian session trading.
With no major market mover up ahead, will pound bears continue to weigh on GBP/USD?
Before we check out Cable’s inflection points, take a look at the headlines that dominated the markets in the last few hours:
- BOC’s Macklem says Bank of Canada will maintain extraordinary stimulus
- Euro advances after ECB’s Lagarde says exchange rate not being targeted
- Lagarde says central bankers are nearing decision on whether to issue a eurozone digital currency
- Expansion in New Zealand’s manufacturing sector dropped in August
- NZ food prices increased 4.2 percent in the year ended August
- Japan’s BSI manufacturing index jumps from -52.3 to 0.1 in Q3 2020
- Japan producer prices up for 2nd month in a row
Upcoming Potential Catalysts on the Economic Calendar:
- German’s wholesale price index at 6:00 am GMT
- U.K.’s monthly GDP at 6:00 am GMT
- U.K.’s industrial production at 6:00 am GMT
- U.K.’s manufacturing production at 6:00 am GMT
- U.S. CPI numbers at 12:30 pm GMT
What to Watch: GBP/USD
If you’ve been too busy (not) keeping up with the Kardashians, then you should know that the pound has taken heavy hits after the U.K. government has rejected calls to withdraw a bill that may violate the withdrawal agreement that it had signed in January.
Unless we see some cooperation between the EU and U.K. reps, then uncertainty over a no-deal Brexit may continue to weigh on the pound.The U.S. is printing its consumer prices later today but word around is that the release won’t affect the dollar much now that the Fed is willing to let inflation run hot in favor of more economic activity.
GBP/USD is a few pips away from the 1.2700 – 1.2750 zone that lines up with a key inflection point and a 61.8% Fib retracement on the 4-hour time frame.
If we see positive Brexit-related headlines today, then GBP/USD could find support from a bullish divergence and revisit and maybe even trade above the 1.3000 handle.
More Brexit uncertainty, or a bit of risk aversion in the markets, on the other hand, could drag Cable below 1.2700 and encourage a trip down to the 1.2500 levels.