GBPUSD:
Tuesday will see the release of monthly UK employment data and US Producer Price Index (PPI), followed by UK and US consumer inflation data on Wednesday. In addition, Thursday’s preliminary UK second quarter GDP data will impact sentiment around the British Pound (GBP) and help determine the next leg of directional movement for the GBP/USD pair.
Meanwhile, the Bank of England’s (BoE) recent move to cut interest rates on August 1 for the first time since 2020, bets on two more rate cuts in 2024, and ongoing unrest in the UK continue to undermine the British Pound’s position. In addition, the risk of further escalation of geopolitical risks in the Middle East provides some support to the safe-haven US Dollar (USD) and puts pressure on GBP/USD.
Israeli intelligence believes that Iran has decided to directly attack Israel and may do so within days in retaliation for the assassination of Hamas leader Ismail Haniyeh in Tehran in late July. Nevertheless, expectations of more interest rate cuts by the Federal Reserve (Fed) may deter Dollar bulls from aggressive bets and serve as a tailwind for GBP/USD.
Hence, it would be prudent to wait for strong follow-through selling before positioning for a resumption of the three-week downtrend from the mid-1,3000s, or the yearly peak reached in July. In the absence of any market-important economic releases on Monday, dollar price dynamics will weigh on GBP/USD and create short-term trading opportunities.
Trading recommendation: We follow the level of 1.2800, if the level is fixed above, we take Buy positions, if the level rebounds, we take Sell positions.
Origin: FreshForex
