Created on October 24, 2024

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2740.
• Add a stop-loss at 1.3045.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.2935 and a take-profit at 1.3045.
• Add a stop-loss at 1.2750.

The GBP/USD pair retreated to a low of 1.2907, its lowest level since August 12. It has dropped by 3.80% from its highest level this year as the US dollar index jumped to a high of $104.56.

Flash manufacturing and services PMI data

The GBP/USD pair continued its strong sell-off as traders waited for the upcoming flash manufacturing and services PMI numbers.

Economists expect the data to show that the UK manufacturing PMI rose to 51.5, while the services figure moved to 52.3 during the month.

If these numbers are correct, it will be a sign that the UK economy is doing modestly well since most countries are seeing a contraction of the manufacturing sector.

The report comes a week after numbers by the Office of National Statistics (ONS) published encouraging inflation and retail sales data. Inflation dropped to 1.7% in September from the previous 2.2%. Retail sales were stronger than expected during the month. Therefore, the BoE may opt for gradual easing of interest rates in the next few meetings.

The GBP/USD pair will next react to the upcoming flash PMIs from the United States. Analysts expect the numbers to show that the manufacturing PMI remained at 47.5, while the services figure was at 55.

The US will also publish the latest new home sales and initial jobless claims data. The jobless numbers are important because the Fed is focusing on the labor market when determining the size of the next interest rate cuts.

Economists have started to reprice the Federal Reserve expectations after the strong jobs numbers released last month. There are also concerns about the upcoming general election, which could see Donald Trump go back to the White House.

GBP/USD technical analysis

The GBP/USD exchange rate has continued its downward trend in the past few weeks. On the daily chart, the pair has moved below the Ichimoku cloud indicator.

The pair has moved below the 50-day moving average. It has also moved to the 38.2% Fibonacci Retracement point.

Also, the Percentage Price Oscillator (PPO) continued moving downwards and dropped to its lowest level since April. Therefore, the pair will likely continue falling as sellers target the 50% retracement point at 1.2135. A move above the resistance level at 1.3045 will invalidate the bearish view. 

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Created on October 24, 2024

• The Japanese yen fell below 153 yen against the US dollar on Wednesday, hitting its lowest level in nearly three months.
• This decline was driven by a strengthening US dollar and rising Treasury yields, fueled by strong economic data and concerns over the US deficit.
• In Japan, traders are looking ahead to the general election this week, with polls indicating that the ruling Liberal Democratic Party may lose its majority with its coalition partner Komeito.
• Consequently, this could raise market concerns about political instability and increase uncertainty over the Bank of Japan’s monetary policy outlook.
• Meanwhile, Japan’s Deputy Chief Cabinet Secretary Okuda declined to comment on currency movements, in contrast to senior currency diplomat Atsushi Mimura, who reaffirmed last week that they are closely monitoring foreign exchange movements, and that excessive volatility is undesirable.

According to stock trading platforms, Japanese stocks fall amid market caution. Japan’s Nikkei 225 index fell 0.8% to 38,105 while the broader TOPIX lost 0.55% to 2,637 on Wednesday, reversing gains earlier in the session as caution gripped sentiment ahead of Japan’s general election this week.

Opinion polls have suggested the ruling Liberal Democratic Party could lose its majority with its coalition partner Komeito, raising concerns about political instability. Higher global bond yields also continued to weigh on stock markets, with the benchmark 10-year U.S. Treasury yield topping 4.2% amid strong economic data and concerns about the U.S. deficit.

In corporate news, shares in Tokyo Metro surged 45% in their debut on Wednesday after raising 348.6 billion yen in its initial public offering, Japan’s biggest in six years. Technology stocks led the decline, with notable losses from Disco Corp (-4.2%), Advantest (-1.1%) and Tokyo Electron (-1%).

In the US stock market, Dow Jones drops more than 600 points, Nasdaq falls 2%. According to trading, the three major US indexes closed sharply lower on Wednesday, as rising Treasury yields and concerns about a US interest rate cut weighed on investors as they digested another round of earnings. According to performance, the S&P 500 and Nasdaq fell 0.9% and 1.6%, respectively, while the Dow fell 4.9 points, its third straight losing session and its worst day in a month. 

The 10-year Treasury yield was higher, reaching 4.25%, drivenby strong economic data and Fed officials sounding cautious about the pace of future US interest rate cuts. Tech giants Nvidia (-2.8%), Apple (-2.1%) and Qualcomm (-3.8%) also weighed. Tesla (-2%) fell ahead of its earnings after the closing bell, as investors closely watched for signs of stabilizing sales and progress in AI transformation.

In addition, Boeing (-1.8%) reported a big quarterly loss, and McDonald’s (-5.1%) faced pressure after its burgers were linked to an E. coli outbreak. In contrast, AT&T jumped 4.7% after its subscriber count rose more than expected.

USD/JPY Technical analysis and Expectations Today:

According to the performance on the daily chart, the general trend of the USD/JPY pair is still bullish, and its recent gains were enough to push the technical indicators towards strong overbought levels. Moreover, with the continued strength of the US dollar and the calming expectations regarding the future tightening of the Japanese central bank’s policy, the bulls may continue to control the trend and currently the closest resistance levels are 153.00, 153.85 and 154.60 respectively. 

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