. Daily Forex Analysis - GBP/USD Rises on Strong GDP.

Daily Forex Analysis – GBP/USD Rises on Strong GDP.

Daily Forex Analysis – GBP/USD Rises on Strong GDP.

10 May 2024

Introduction

The GBP/USD rises near 1.2540, propelled by robust UK GDP figures, with QoQ growth at 0.6%, exceeding expectations. However, the Pound faces headwinds post-Bank of England’s interest rate hold at 5.25%, with potential cuts looming. Meanwhile, the EUR/USD weakens to 1.0775 on a stronger USD driven by hawkish Fed remarks. USD/JPY holds firm around 155.50 amid Fed’s cautious stance. Australian Dollar retraces near key levels, eyeing US Consumer Sentiment.

Markets In Focus Today – GBP/USD

GBP/USD rises to near 1.2540, driven by higher UK GDP.

GBP/USD edged higher to near 1.2540 during Asian hours on Friday, buoyed by the release of higher-than-expected UK Gross Domestic Product (GDP) data for the first quarter. GDP (QoQ) rose by 0.6%, reversing the previous quarter’s decline of 0.3%, surpassing expectations of a 0.4% increase. Additionally, GDP (YoY) increased by 0.2%, rebounding from the previous decline of 0.2%. However, the Pound Sterling (GBP) encountered challenges following the Bank of England’s (BoE) decision to maintain the interest rate at 5.25% on Thursday. Reuters reported that BoE Governor Andrew Bailey mentioned during the post-decision press conference that “a rate cut next month was a possibility,” but he intends to wait for inflation, activity, and labor market data before deciding. This has raised the prospect of future rate cuts, putting pressure on the British Pound and weakening the GBP/USD pair. On Friday, the preliminary Michigan Consumer Sentiment Index is forecasted to show a slight decrease in May. This index is a survey that evaluates sentiment among US consumers, encompassing three primary areas: personal finances, business conditions, and buying conditions.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.2517 | Positive Crossover | Bullish
  • MA 20 : 1.2519 | Positive Crossover | Bullish
  • MA 50 : 1.2561 | Negative Crossover | Bearish

Simple :

  • MA 10 : 1.2527 | Positive Crossover | Bullish
  • MA 20 : 1.2483 | Positive Crossover | Bullish
  • MA 50 : 1.2598 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 50.1910 | Buy Zone | Bullish

Stochastic   Oscillator : 42.04 | Neutral Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.2657 R2 : 1.2754
  • S1 : 1.2345 S2 : 1.2248

Overall Sentiment : Neutral Market Direction : Buy

Trade Suggestion : Limit Buy : 1.2511 | Take Profit : 1.2564 | Stop Loss : 1.2485

EUR/USD

EUR/USD weakens to 1.0775 on the firmer USD on Friday.

The EUR/USD pair trades on a softer note near 1.0775 during the early European hours on Friday. The downtick of the major pair is supported by the renewed US Dollar (USD) demand amid hawkish comments from Federal Reserve (Fed) officials. Later on Friday, the US Michigan Consumer Sentiment Index for May will be released, which is projected to drop from 77.2 in April to 76.0 in May. The pair keeps the bearish vibe below the key EMA on the daily timeframe. The key resistance level will emerge in the 1.0790–1.0800 zone; the first downside target is located at 1.0724. The US Dollar , rebounds slightly after tumbling to 105.00. The next move in the US Dollar will be guided by April’s US Inflation data, which will be published on Wednesday. The inflation data will provide meaningful cues about whether the Fed will start reducing interest rates from September. Till then, interest rate guidance from Fed speakers will drive movement in the US Dollar.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 1.0748 | Positive Crossover | Bullish
  • MA 20 : 1.0740 | Positive Crossover | Bullish
  • MA 50 : 1.0766 | Positive Crossover | Bullish

Simple :

  • MA 10 : 1.0742 | Positive Crossover | Bullish
  • MA 20 : 1.0705 | Positive Crossover | Bullish
  • MA 50 : 1.0788 | Negative Crossover | Bearish

RSI (Relative Strength Index) : 55.8329 | Buy Zone | Bullish

Stochastic   Oscillator : 60.75 | Buy Zone | Positive

Resistance   And Support Levels :

  • R1 : 1.0826 R2 : 1.0893
  • S1 : 1.0609 S2 : 1.0542

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 1.0751 | Take Profit : 1.0797 | Stop Loss : 1.0724

USD/JPY

USD/JPY holds positive ground around 155.50 on Fed’s hawkish comment.

The USD/JPY pair trades on a stronger note around 155.50 on Friday during the early Asian trading hours. The renewed US Dollar (USD) demand lifts the pair. Nonetheless, the verbal intervention and the hawkish comment from the Bank of Japan’s (BOJ) Governor Kazuo Ueda might cap the downside of the Japanese Yen (JPY) for the time being. On Thursday, San Francisco Fed President Mary Daly stated that the central bank may take more time to return inflation to its target as the uncertainty about inflation in the next few months has increased. Other Fed officials this week have also shown they favor keeping rates at their current levels for longer. This, in turn, might lift the Greenback and create a tailwind for USD/JPY. Financial markets anticipate the US central bank to keep policy on hold for the rest of the year as it looks for “greater confidence” in inflation, and Fed’s Chair Jerome Powell emphasized that it might take longer than expected to achieve that confidence.”

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 155.0306 | Positive Crossover | Bullish
  • MA 20 : 154.5946 | Positive Crossover | Bullish
  • MA 50 : 152.8839 | Positive Crossover | Bullish

Simple :

  • MA 10 : 154.9836 | Positive Crossover | Bullish
  • MA 20 : 155.0438 | Positive Crossover | Bullish
  • MA 50 : 152.3400 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 57.6895 | Buy Zone | Bullish

Stochastic   Oscillator : 95.63 | Buy Zone | Neutral

Resistance   And Support Levels :

  • R1 : 159.8369 R2 : 162.0561
  • S1 : 152.6531 S2 : 150.4339

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Stop Buy : 155.89 | Take Profit : 157.80 | Stop Loss : 154.68

AUD/USD

Australian Dollar holds position near a psychological level, US Consumer Sentiment eyed.

The Australian Dollar (AUD) is retracing its recent gains on Friday, following a rally on Thursday. The rally was propelled by a decline in the US Dollar (USD) as weak US Initial Jobless Claims indicated a more dovish outlook for the Federal Reserve (Fed). This helped offset pressure on the Aussie Dollar resulting from the Reserve Bank of Australia (RBA)’s less hawkish stance, especially in light of the higher-than-expected inflation data. The Australian inflation rate dropped to 3.6% in the first quarter from 4.1% in the previous quarter, marking the fifth consecutive quarter of slowing. However, it exceeded forecasts of 3.4%. Additionally, the Monthly Consumer Price Index (YoY) for March surged to 3.5%, surpassing the expected reading of 3.4%. The Reserve Bank of Australia (RBA) acknowledged that recent progress in controlling inflation has stalled and maintained its stance of keeping options open. The US Dollar Index (DXY), which gauges the performance of the US Dollar (USD) against six major currencies, attempts to rebound due to the sentiment of the Federal Reserve (Fed) maintaining higher interest rates for longer. However, the decline in the US Treasury yields could contribute to pressure on the Greenback, supporting the AUD/USD pair.

Technical   Overview With Chart :

Moving Averages :

Exponential :

  • MA 10 : 0.6579 | Positive Crossover | Bullish
  • MA 20 : 0.6553 | Positive Crossover | Bullish
  • MA 50 : 0.6543 | Positive Crossover | Bullish

Simple :

  • MA 10 : 0.6577 | Positive Crossover | Bullish
  • MA 20 : 0.6518 | Positive Crossover | Bullish
  • MA 50 : 0.6540 | Positive Crossover | Bullish

RSI (Relative Strength Index) : 58.3399 | Buy Zone | Bullish

Stochastic   Oscillator : 46.23 | Neutral Zone | Neutral

Resistance   And Support Levels :

  • R1 : 0.6602 R2 : 0.6668
  • S1 : 0.6386 S2 : 0.6320

Overall Sentiment : Bullish Market Direction : Buy

Trade Suggestion : Limit Buy : 0.6585 | Take Profit : 0.6648 | Stop Loss : 0.6546

Elsewhere In The Forex Market

USD/CAD up 0.02% to 1.3680, The NZD/USD down 0.26% to 0.6018. The EUR/GBP down 0.06% at 0.8603. USD/CHF up 0.1% at 0.9060. AUD/NZD up 0.16% at 1.0987, The USD/CNY up 0.07% at 7.2241, AUD/SEK down 0.21% at 7.1680, at the time of writing.

Key Economic Events & Data Release Today:

(GBP) GDP (QoQ) (Q1) Forecast 0.4%, Previous –0.3% at 11:30. (GBP) Industrial Production (MoM) Forecast –0.5%, Previous 1.1% at 11:30. (GBP) GDP (YoY) (Q1) Forecast 0.0%, Previous –0.2% at 11:30. (GBP) Manufacturing Production (MoM) (Mar) Forecast –0.5%, Previous 1.2% at 11:30. (GBP) GDP (MoM) (Mar) Forecast 0.1%, Previous 0.1% at 11:30. (EUR) ECB Publishes Account of Monetary Policy Meetings at 17:00. (CAD) Employment Change (Apr) Forecast 20.9K, Previous –2.2