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Technical Analysis

GBP/USD Analysis – September 15, 2021

Sterling Supported Over 1.3800 Level

After hitting a high of $1.3914 and a low of $1.3802, the GBP/USD pair finished at $1.3806. Following the dramatic drop in the US dollar, the GBP/USD reached its highest level since August 6th, a more than one-month high. Nevertheless, the currency pair GBP/USD could not hold its gains for long and began to fall during American trading hours, reversing its trajectory to fall for the third consecutive session.

On Tuesday, the US Dollar Index, which measures the value of the greenback against a basket of six major currencies, dipped to 92.32, weighing on the greenback and lifting GBP/USD values during early trading hours. The yield on the benchmark 10-year note in the United States fell for the second day and hit 1.26 percent, its lowest level since August 24th, adding to the strength in the GBP/USD during early trading hours.

On the data front, the Average Earnings Index for the quarter jumped to 8.3 percent at 11:00 GMT, beating expectations of 8.2 percent, bolstering the British Pound, and halting further losses in GBP/USD. The Claimant Count Change for August fell to -58.6K, versus an expected -71.7K, weighing on the British Pound, which led to a further decline in GBP/USD. The UK unemployment rate stayed unchanged in July, despite estimates of 4.6 percent.

The NFIB Small Business Index increased in August to 100.1 versus a forecast of 99.0, supporting the US dollar and adding to the loss in the GBP/USD pair at 15:00 GMT. The CPI in August fell to 0.3 percent against expectations of 0.4 percent at 17:30 GMT, weighing on the US dollar and causing more losses in GBP/USD. In August, the Core CPI decreased to 0.1 percent, compared to the projected 0.3 percent, weighing on the US dollar and limiting the decline in GBP/USD values.

Following the release of a disappointing US CPI report, the greenback came under immediate pressure, pushing GBP/USD to its six-week high. The dollar’s selling pressure grew in anticipation of the Federal Reserve’s decision not to withdraw economic stimulus at its September meeting. This new round of dollar selling pushed the riskier currency pair GBP/USD higher on the board.

However, the GBP/USD currency pair came under renewed pressure when UK government experts warned that if regulations were not strengthened, the number of COVID hospital admissions in England might skyrocket.
According to the Sage committee, hospitalizations in England might rise to 2000 to 7000 per day next month, up from 1000 now. They stated that a very light set of limits could help to reduce illnesses, whereas Boris Johnson has proposed that higher vaccines could help to prevent additional restrictions.

PM Boris Johnson revealed his COVID-19 winter plans on Tuesday, saying that some measures would be kept in reserve as part of the government’s Plan B if the NHS was put under unsustainable strain. Vaccine passports, enforced face masks, and work-from-home recommendations were among them.

However, news from the Scientific Advisory Group for Emergencies (Sage) on Tuesday that another significant wave of hospitalization could occur in the coming months continued to weigh on the British Pound, as GBP/USD lost all of its daily gains and turned red for the day.

GBP/USD Intraday Technical Levels

Support Resistance
1.3768 1.3880
1.3729 1.3953
1.3657 1.3991
Pivot Point: 1.3841

GBP/USD – Technical Outlook

On Wednesday, the GBP/USD pair is trading at 1.3810 level, gaining immediate support at the 1.3800 level. On the 4-hour timeframe, this support level is extended by an upward trendline. The closing of Doji and bullish engulfing candles above the 1.3800 level is extending solid support to the GBP/USD pair.
On the resistance side, the pair’s next resistance prevails at the 1.3838 level. This level is also being extended by an intraday pivot point level. Further, on the higher side, the GBP/USD will be exposed towards the 1.3875 level upon the breakout of the 1.3838 level.
The breakout of the 1.3801 level exposes the GBP/USD price towards the 1.3765 and 1.3728 levels. Bullish bias dominates over 1.3800 level and vice versa. All the best!
All the best