The GBPUSD exchange rate has moved above recent resistance but the market may move in the dollar’s favour.
GBPUSD – Weekly Chart
GBPUSD has rallied above resistance at the 1.31183 level but now faces a potential retracement. Support comes in at the uptrend line around 1.28 but would target 1.23 below there.
Wednesday will be the key day for the GBPUSD with FOMC meeting minutes released. The central bank cut rates a few weeks back, but this is an important release to see what the underlying opinions were about the economy and the reason for the cut. Volatility should pick up and traders will be keen to predict a path for further rate cuts.
Inflation data follows on Thursday with core and base CPI due out Thursday and that report will also gain attention. The previous core report was higher than anticipated with the base coming in line with expectations on both a monthly and yearly level. A possible revision could also come and the focus is on the Fed’s plan for November.
Further data comes from Friday’s PPI and core PPI release, which is similar to CPI and could further the trend from Wednesday. PPI is the producer end of price changes and both readings were higher than expected last month so traders will be keen to see if inflation is still falling.
The early US Dock Worker strike on the eastern coast should support the price of the dollar and there is also a potential for further tension in the Middle East.
No action was seen as of Sunday afternoon, but it is unlikely that Israel will not retaliate to the missile attack last week. The US has urged Israel not to strike Iran’s oil facilities and urged the country to think about “other alternatives”.
Any escalation could see the US dollar supported and recent economic issues in the UK could also hurt the pound as the new government faced difficult decisions.
