US Unemployment Claims in Focus
After hitting a top of $1.3786 and a low of $1.3727, the GBP/USD was finished at $1.3755. Despite the strength of the US dollar, the currency pair GBP/USD gained some support on Wednesday and regained a little bit of the previous day's loss.
The US dollar was strong on Wednesday, with the DXY rising to 93.26 after announcing the Fed's July meeting minutes. The 10-year Treasury yield, on the other hand, dipped to 1.25 percent from its daily high of 1.30 percent, halting additional dollar advances.
On the data front, the Consumer Price Index for July fell to 2.0 percent from 2.3 percent projected at 11:00 GMT, weighing on the British Pound, thus capping upward momentum in GBP/USD. The Core CPI for July fell to 1.8 percent, below expectations of 2.0 percent, weighing on the British Pound & limiting advances in GBP/USD. The PPI Input rose to 0.8 percent in July, compared to a forecast of 0.5 percent, bolstering the British Pound and adding to GBP/USD gains.
The PPI Output stayed unchanged, as expected, at 0.6 percent. The Retail Price Index increased to 3.8 percent from 3.6 percent expected, bolstering the British Pound and pushing GBP/USD higher. At 13:30 GMT, the Housing Price Index for July jumped to 13.2 percent, up from 11.3 percent expected, bolstering the British Pound and adding upward momentum to the GBP/USD pair.
Building Permits in July climbed to 1.64 million, below a forecast of 1.61 million, supporting the US dollar and capping any advances in GBP/USD at 17:30 GMT. Housing Starts fell to 1.53 million in July, below expectations of 1.60 million, weighing on the US dollar and adding to GBP/USD advances.
Furthermore, the Federal Reserve's minutes revealed that many Fed officials discussed tapering the economy's monetary stimulus. Several FOMC members were leaning toward reducing economic support early next year, while others thought the pace of bond purchases would pick up in the coming months. Following the publishing of meeting minutes, the US dollar gained strength versus other currencies, and the GBP/USD stayed under pressure for the rest of the day.
Meanwhile, compared to the United States, the coronavirus situation in the British countryside has stabilized, with 33,904 new cases and 111 deaths reported. In the United Kingdom, around 61 percent of the total population has been fully vaccinated, and the rate of vaccination is projected to accelerate as 16 and 17-year-olds in England begin receiving vaccine shots on August 23. This news also pushed the British Pound higher on Wednesday, adding to the GBP/USD gains.
GBP/USD Intraday Technical Levels
Pivot Point: 1.3756
GBP/USD - Technical Outlook
The GBP/USD is trading with a bearish bias at the 1.3714 level. In the 4-hour timeframe, the GBP/USD pair’s immediate support prevails at the 1.3718 level, which marks the double bottom support. A bearish breakout of this support level exposes the cable towards the next support areas of 1.3686 and 1.3650 levels.
On the flip side, the bearish bias dominates below an intraday pivot point level of 1.3750. A bullish crossover at the 1.3750 level exposes the GBP/USD pair until the 1.3785 level. The Stochastic indicator is holding in a bearish zone, suggesting strong odds of a selling trend. However, the failure to break below the 1.3718 level has the potential to trigger a bullish reversal in the GBP/USD pair today. The major focus will be on the U.S. unemployment claims that are due to come out during the New York session. It may help drive further price action in the GBP/USD prices. All the best!
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