Daily Market Recap - GBPUSD

The British pound surged against the US dollar during the Asian session before pulling back from daily highs shortly after the US market open after a resurgence in greenback demand. The GBPUSD is currently trading above the 1.33438 resistance turned support level, up 0.35 percent for the day.

The pound benefited from an overall upbeat market sentiment early on Tuesday following the release of this morning‘s economic data by Australia and China which continue to point towards a firm recovery in the business climate. The Chinese Caixin Manufacturing PMI helped stoke investors’ risk appetite across the board after coming above expectations at 53.1.

However European data later in the day came in mixed. France and Italys manufacturing PMI surpassed their respective targets and the overall Eurozone unemployment rate came in below consensus. That said, we saw a contraction in the European CPI for August which is raising concern over a potential slump in consumer behavior entering the final quarter of the year.

Meanwhile in Britain, the manufacturing PMI fell just short of expectations at 55.2 versus a consensus of 55.3. The GBPUSD didnt offer many reactions to the PMI miss given the negligible variance with analysts pointing out that traders are more likely focused on the Brexit talks, which at the moment, appear to be stuck in a rut. A breakthrough in negotiations will likely send the pound higher but seems unlikely at this point.

From a technical perspective, the GBPUSD is marking an inverted bullish hammer candlestick on the daily chart. Earlier gains by bulls have been kept in check by sellers rejecting any advances above the 1.348 handle. Traders should look towards a confirmation candle in the coming session in order to assert whether the uptrend is confirmed and will continue.

(Chart Source: Tradingview 01.09.2020)

The current momentum is creeping slowly in favor of the bulls, with the MACD marking a golden cross was the short term moving average passes above the longer-term moving average, an encouraging sign for GBPUSD bulls. The upside target will now be to close above the 1.35149 December 2019 high, with the 1.33438 marks offering up some degree of support for any pullbacks this week.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.