GBP/USD gains and EUR/GBP slides on stronger British pound while USD/JPY stays range bound
Outlook on GBP/USD, EUR/GBP and USD/JPY ahead of US CPI data.
GBP/USD rises for six straight days
GBP/USD’s rise from its early October seven-month low at $1.2038, for six straight days, remains on track to reach the July-to-October downtrend line at $1.2366 despite misses on UK industrial and manufacturing production as well as construction output data.
A rise and daily chart close above the three-month downtrend line at $1.2366 should put the 200-day simple moving average (SMA) at $1.2445 on the map.
Potential slips should find support between the $1.2271 late September high and Monday’s $1.2264 low. Further minor support comes in at the 27 September low at $1.2111 and Friday’s low at $1.2106. While these levels hold, an upside bias remains in play.
EUR/GBP slid through support at £0.8631
EUR/GBP's decline from its £0.8706 September high has taken it through its late September low at £0.8631 towards the late August high and the 55-day SMA at £0.861 to £0.8607 on general British pound appreciation.
Another potential downside target is the mid-September low at £0.857.
Immediate resistance comes in along the one-month tentative downtrend line at £0.8642 ahead of Thursday’s £0.8691 high. While trading below these levels, downside pressure should continue to dominate
USD/JPY remains side-lined around the ¥149.00 level
USD/JPY's sell-off from its 10-month high at ¥150.16 amid fears of Bank of Japan (BoJ) intervention fears took it to ¥147.29 in early October before the cross levelled out around the ¥149.00 mark.
Despite Japan machine orders falling by 0.5% in August, USD/JPY is little changed on Thursday. Only a fall through this week’s low at ¥148.17 would probably provoke a slide towards the ¥147.29 low taking place.
Likewise only a rise above Friday’s high at ¥149.53 would put the psychological ¥150.00 region back on the map. For now the medium-term bullish trend stays intact, though.
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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