GBPUSD:
The pound is drifting toward 1.3485 after the market almost fully priced in a Bank of England rate cut on 7 August: the probability of easing has risen amid an increase in unemployment to 4.7% and a slowdown in wage growth to 5.0%. Two consecutive months of GDP contraction and a drop in industrial output add to fears of a “hard landing” for the U.K. economy.
With higher U.S. Treasury yields, it is unattractive for global investors to hold pound-denominated assets, so any upward pullbacks are viewed as opportunities to open short positions. Trade frictions with key partners disrupt supply chains and weigh on the U.K. trade balance.
Ahead of key U.S. data releases, demand for the safe-haven dollar remains firm, and the prospect of imminent U.K. monetary easing caps sterling’s upside potential, making a test of support at 1.3405 likely in the coming sessions.
Trading recommendation: SELL 1.3485, SL 1.3510, TP 1.3405
Origin: FreshForex
