Eyes on FOMC Today
After hitting a high of $1.3693 and a low of $1.3641, the GBP/USD pair finished at $1.3659. GBP/USD fell for the fourth straight session, reaching its lowest level since August 23, owing to current risk-off market sentiment and cautious investor behavior. On Tuesday, the GBP/USD exchange rate held at its four-week low as investors awaited the conclusions of this week's meetings of the Bank of England and the Federal Reserve in the United States. Furthermore, the Chinese real estate behemoth Evergrande's debt problems exacerbated the market's risk aversion.
The currency pair GBP/USD recovered some of its losses during early trading hours on Tuesday, thanks to support from a record $137 billion demand for the green government bond by the UK, which totaled $10 billion. However, the gains were short-lived and failed to counter the bearish pressure. Risk-off market sentiment was high due to the Delta variation spread and fears about possible economic ramifications from Evergrande's debt troubles.
The GBP/USD fell on Tuesday, owing to the general market downturn brought on by Evergrande. The company's revelation that it might not be able to repay its debts related to its $300 billion in borrowings this month brought Wall Street down to its lowest level since May on Monday. The currency pair GBP/USD is a risk-correlated currency pair closely linked to global equity market developments. The news that Evergrande was approaching its debt payment deadline on Thursday had a significant impact on GBP/USD since it caused a risk-off market reaction.
On the other hand, at 11:00 GMT, the Public Sector Net Borrowing for August increased to 19.8 billion dollars, up from 14.5 billion dollars expected, weighing on the British Pound and adding to the loss in GBP/USD. At 15:00 GMT, the CBI Industrial Order Expectations rose to 22 from 15 previously, bolstering the British Pound and preventing additional losses in GBP/USD. Building permits for August surged to 1.73 million, below a forecast of 1.60 million, supporting the US dollar and adding to the drop in GBP/USD at 17:30 GMT. The June Current Account revealed a deficit of -190 billion dollars, vs. a forecast of -193 billion dollars, which bolstered the US currency and pulled GBP/USD lower. The number of housing starts increased to 1.62 million in August, exceeding expectations of 1.55 million, bolstering the US dollar and adding to the GBP/USD loss.
GBP/USD Intraday Technical Levels
Pivot Point: 1.3664
GBP/USD - Technical Outlook
The GBP/USD is trading with a bearish bias at the 1.3640 level, gaining immediate support at the 1.3630 level. On the 4-hour chart, the pier is heading towards the next support level of 1.3630. A break below this specific support level exposes the GBP/USD pair to the next support level of 1.3604 level.
An additional break out of the 1.3604 level exposes the currency pair towards the next support level of the 1.3573 level. On the bullish side, GBP/USD may find immediate resistance at the 1.3661 level, which is being extended by an intraday pivot point level. The RSI and stochastically suggest a selling trend in the GBP/USD pair. Bearish bias dominates below 1.3661 level today. All the best!
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