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GBP / USD Trading Outlook

Friday 2nd September

GBP/USD opened in Asia at 1.6181 after a somewhat volatile European session which forced the pair down to a session low of 1.6132.  The market experienced reduced liquidity during the US session as Cable channelled sideways up until the start of the Asian session, seemingly waiting for US non-farm payroll data due at 12:30 GMT today.  Traders seemed unwillingly to take on risk.  Currently trading higher at 1.6202, initial resistance seems to be at 1.6207.

Thursday 1st September

GBP/USD topped at 1.6330 yesterday before setting into a downtrend which continued to drift lower in the Asia session. More negativity on the European debt crisis is seeping back into press helping the US dollar strengthen against sterling and the euro on risk aversion. House prices in the UK have fallen by 0.4% y/y when a rise was expected and UK PMI for manufacturing came out slightly better than expected at 49 vs. 48.6 but the figure is still below the 50 which suggests a negative outlook. This afternoon we have US jobless claims and ISM manufacturing with a forecast below the 50 (neutral) level at 48.5.

Wednesday 31st August

GBP/USD opened in Asia at 1.6300 where it stayed for the overnight session. But the London open had a different sentiment and the GB pound dropped against the US dollar and the euro. GBPUSD fell to 1.6260 the initial support level. Traders have said with lack of UK data today it would leave the pound vulnerable to swings. Last night the FOMC minutes were dovish and revealed that some members believe that ‘recent economic developments justify a more substantial move’. The Fed is committed to keeping rates low until mid-2013. On the data front US consumer confidence fell to lowest level since April 2009. No UK data out today and from the US we have the ADP employment change with a forecast of 103K and factory orders expected to be positive at 1.8%.

Tuesday 30th August

GBP/USD has plunged 100 points this morning on the London open as traders are eager to get back into the game after the bank holiday. The move took the pair from around the 1.6400 level, where it had been comfortably trading overnight in the Asia session, to the low 1.63s. It has tested the 1.6322 support. Today’s FOMC minutes released at 18:00 GMT may be more forthcoming on the possibility of QE3, since Bernanke’s speech last Friday did not uncover much. Also look out for the US consumer confidence due out at 14:00 GMT with a forecast at 52.0.

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