GBPUSD:
The GBP/USD pair started the new week on a weaker note and is trading around 1.2960-1.2955. Spot prices, however, remain within striking distance of the lowest level since August 16, near 1.2900 reached last week, and appear vulnerable to an extension of the month-long downtrend amid a bullish US Dollar (USD).
On Friday, the U.S. Census Bureau reported that U.S. Durable Goods Orders fell 0.8% in September, which was slightly better than expectations of a 1% decline. Additional details of the report showed that new orders excluding transportation costs rose 0.4% in the reporting month. In addition, the University of Michigan’s consumer sentiment index hit a six-month high of 70.5 in October, which was better than both the preliminary result and the previous month’s reading.
This data supports the view that the Fed will continue to moderate rate cuts throughout the year, which in turn triggers a new rise in US Treasury yields and continues to support the dollar. The British Pound (GBP), on the other hand, is weakened by rising bets on further interest rate cuts by the Bank of England (BoE) in November and December, backed by a drop in the UK Consumer Price Index to its lowest level since April 2021 and below the central bank’s 2% target.
The aforementioned fundamental backdrop suggests that the path of least resistance for the GBP/USD pair lies to the downside. Even from a technical perspective, recent repeated failures near the psychological 1.3000 mark support the prospects of a continued decline from the 1.3435 area, or the highest level since February 2022, reached last month.
Trading recommendation: Trade predominantly with Sell orders from the current price level.
Origin: FreshForex
