Big economic updates ahead for both the Greenback and Sterling, making the recent bounce in Cable the setup to watch to start this new week.
Intermarket Snapshot
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Fresh Market Headlines & Economic Data:
- Swiss sight deposits jump signals more SNB forex intervention
- Argentine peso crashes after Macri gets thumped in primary election
- Oil falls on fears of a global economic downturn
- Dow drops 200 points at the open as US-China trade, Hong Kong protest tensions rise
- Labour exploring rapid September no-confidence vote in Boris Johnson
- China’s July new loans dip more than expected, further policy easing seen
- China fixes yuan midpoint at 7.0211 on Monday — weaker than 7 for three consecutive sessions
- New Zealand’s PM says government always looking at ways to stimulate economy
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand food prices at 11:45 pm GMT
- Japan PPI at 12:50 am GMT (Aug. 13)
- Australia NAB Business confidence at 2:30 am GMT (Aug. 13)
- German Wholesale price index at 7:00 am GMT (Aug. 13)
- U.K. unemployment rate & average earnings at 9:30 am GMT (Aug. 13)
- ZEW economic sentiment at 10:00 am GMT (Aug. 13)
- U.S. CPI at 1:30 pm GMT (Aug. 13)
What to Watch: GBP/USD
Starting off with Cable on this weekly daily watchlist, which has a couple of top tier economic updates from both the U.K. and the U.S. to hopefully keep this early week volatility going. We’ve got U.K. employment data set to release during the Tuesday morning London session, while the U.S. will release the latest consumer prices data during the Tuesday morning U.S. session. Both jobs and inflation rates are important inputs to monetary policy decisions, so it’s likely there will be a strong reaction in Sterling and USD pairs to the upcoming data.
The price action in GBP/USD was rather choppy this past week, up until the Friday session where risk aversion sentiment and weak U.K. economic data sent the pair lower into the weekend. Today, we’ve got a solid bounce in the pair, roughly one daily ATR from the lows and hitting a broken support area around the major psych level of 1.2100, where short-term resistance may form.
If you’re a bear on the pair, this retest of broken support may be an opportunity to play the trend lower, but if you’re a conservative trader, you may want to wait for the upcoming data to see the reaction before setting your trade orders. If you’re a little more aggressive, it makes sense to scale into a position, from current levels up to the next minor resistance area just under 1.2200.
If you’re a bull on the pair, to break the downtrend you’ll definitely need a bullish surprise/reaction to the U.K. employment data, which is a low probability scenario and why a strong upside break is possible. And another decline in CPI growth from the U.S. would likely help your argument as well, but it’s probably necessary to have both a strong surprise from the U.K. and weak U.S. CPI data to break above the 1.2200 handle, and when it makes sense to start putting together a long position.