U.S. Dollar Index rallied as traders focused on ISM Manufacturing PMI report. The report indicated that ISM Manufacturing PMI decreased from 54.6 in August to 54.5 in September, compared to analyst forecast of 55. Numbers above 50 show expansion. The report missed analyst expectations but showed that U.S. economy remained in great shape, which was bullish for the American currency.
Traders also focused on the Initial Jobless Claims report. The report showed that 197,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 200,000.
The U.S. dollar has fallen against the Japanese yen during trading on Wednesday as we continue to see a lot of volatility in the bond markets.
Quite frankly, part of what we are seeing is a situation where traders are looking to see whether or not the Federal Reserve will have to continue hiking rates.
The fact that the core PCE numbers came out lower than anticipated does suggest that maybe the Federal Reserve may not have to be as aggressive as once feared. That being said, I only read so much into that, and I recognize that traders will continue to see this as a market that remains held hostage by interest-rate expectations out of the United States, along with energy inflation, which has a lot to do with that as well. Then, of course, there is the Bank of Japan and whether or not they are going to get involved in the market.
Previous intervention
The recent USD/JPY action that we had seen coming from Japan intervening in the currency market to save the Japanese yen has rattled the market, but now we find ourselves sitting just below the 200-day EMA and the 50-day EMA near the ¥158 level. With that being said, I like the idea of taking advantage of short-term dips to continue to buy into this market, as we see a lot of upward pressure on the U.S. dollar from the longer-term standpoint.
But perhaps more importantly, we have a situation where the Japanese will be hard-pressed to truly hike rates with any type of seriousness over the next several months, if not years. After all, the debt levels in Japan are historically bad, and they are only getting worse. It becomes very difficult to finance those debts at those extraordinarily high levels.
So, with that being said, I still favor going against the Japanese yen, although I do recognize that there could be some problems along the way.
Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on:Pairs Of Aces Podcast,The Trader Guy, FXEmpire
The EUR/USD is currently at 1.1301 on the 2 hour chart. I see that the pair broke 1.1312 support. Below the support, I see no major support until 1.1283. Once that level is broken, then support is located at 1.1256, and 1.1230.
From the recent movement of EUR/USD, the pair has formed a series of lower highs and lower lows. Because of this, the overall trend is down. A break of 1.1283 changes the trend to up, and then 1.1312 is the first major resistance.
The first support I am watching is 1.1283. Expect 1.1256 below. Limit orders to buy are now filled at 1.1312, above which 1.1350 and 1.1373 become key levels.
RSI is near the 30 level and is in the bearish territory, signaling that further declines may be limited. I am bearish and expect downside to the 1.1312/50 area, which is reinforced by a lower trendline, and a bearish channel. A move above the 1.1373 area changes the near-term bias. I shall wait for a break below 1.1283 for another target at 1.1256.
GBP/JPY returns to 208.00 after bouncing from YTD lows at 206.89 earlier in the day.
The upwardly revised UK GDP and the narrowing Current Account deficit have provided additional support to the Pound.
In Japan, weak Retail Trade and Industrial Production data undermined confidence on the Yen.
The British Pound (GBP) is bouncing strongly against the Japanese Yen (JPY) in Wednesday’s early London session, supported by the upward revision of the UK’s Gross Domestic Product (GDP) and a positive surprise in the Current Account. The GBP/JPY has regained most of the ground lost during the early Asian session, trading at 208.00 at the time of writing, after hitting a fresh year-to-date (YTD) low at 206.89.
The UK economy grew at a 0.5% pace in the second quarter, instead of the 0.4% previously estimated, according to final Gross Domestic Product (GDP) figures released earlier in the day. Likewise, the year-on-year (Y-o-Y) reading has been revised up to 1.4% from the 1.2% preliminary reading.
Beyond that, UK Current Account data released at the same time showed that the deficit narrowed unexpectedly to GBP 19.932 billion in Q2 from a downwardly revised GBP 21.12 billion in Q1, against market expectations of a widening gap of GBP 25.6 billion.
Data from Japan has failed to support the Yen on Wednesday. Retail Trade contracted 1.2% in August, after growing 2.1% in July. Industrial Production also disappointed as preliminary data showed a 4.8% decline in August, against the 1.7% growth anticipated by the market consensus and following a 0.5% increase in July,
Technical Analysis: Bulls are likely to be challenged at the 208.30 area
GBP/JPY has bounced up to 207.90, but the near-term bias remains bearish, with price action holding below a previous trendline support, which will likely act as resistance now. Momentum indicators on 4-hour charts remain within negative territory, with the Relative Strength Index (14) below 40, despite the recent rebound, and the Moving Average Convergence Divergence (MACD) slightly negative, which suggests that the recovery is still frail.
Bulls are facing a cluster of resistances in the 208.30 area, where the mentioned trendline meets the intra-day high. A confirmation above here would boost confidence for bulls and expose the September 27 and 28 highs in the 209.00 area. Further up, the September 22 and 24 highs, near 210.15 seem out of reach for the coming sessions.
On the downside, the Pound has an important support area at 207.00. Below here, the 127.2% Fibonacci retracement of September’s rally, at the 206.00 area, seems like a plausible target.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.10%
-0.37%
-0.31%
-0.06%
0.11%
-0.32%
-0.12%
EUR
0.10%
-0.24%
-0.21%
0.03%
0.20%
-0.22%
-0.02%
GBP
0.37%
0.24%
0.02%
0.29%
0.45%
0.04%
0.24%
JPY
0.31%
0.21%
-0.02%
0.24%
0.43%
-0.02%
0.21%
CAD
0.06%
-0.03%
-0.29%
-0.24%
0.18%
-0.25%
-0.04%
AUD
-0.11%
-0.20%
-0.45%
-0.43%
-0.18%
-0.43%
-0.21%
NZD
0.32%
0.22%
-0.04%
0.02%
0.25%
0.43%
0.21%
CHF
0.12%
0.02%
-0.24%
-0.21%
0.04%
0.21%
-0.21%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The Pound US Dollar (GBP/USD) exchange rate climbed on Wednesday as the US Dollar came under renewed pressure following softer-than-expected inflation figures.
At the time of writing, GBP/USD was trading at around $1.3281, up roughly 0.4% from Wednesday’s opening levels.
The US Dollar (USD) faced heavy selling pressure on Wednesday after the latest core PCE price index pointed to a weaker inflationary backdrop than markets had anticipated.
The Federal Reserve’s preferred measure of inflation eased to 3% in August, falling well short of forecasts for a reading of 3.3%.
July’s figure was also revised lower, from 3.3% to 3%.
August’s softer figures prompted a sharp reassessment of Federal Reserve interest rate expectations, with CME’s FedWatch tool showing the probability of an October hike falling to around 37%, having stood above 70% earlier in the week.
The inflation data more than offset the impact of the latest US GDP figures, which showed the pace of economic growth in the second quarter had been revised significantly higher.
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The Pound (GBP) also found support on Wednesday after revised UK GDP figures offered further evidence that the domestic economy performed better than initially estimated during the second quarter.
Data released by the Office for National Statistics (ONS) confirmed quarterly growth had been revised up to 0.5%, from the previous estimate of 0.4%.
The stronger reading reinforced expectations that the Bank of England (BoE) could resume raising interest rates following its November policy meeting, providing an additional source of support for Sterling.
Near-Term GBP/USD Forecast: US Manufacturing PMI in Focus
Looking ahead to Thursday, the next major catalyst for the Pound US Dollar (GBP/USD) exchange rate is likely to be the release of the latest ISM manufacturing PMI.
A stronger-than-expected reading for September could point to continued momentum in the US factory sector and give the US Dollar an opportunity to recover some of its recent losses.
However, any reaction may prove relatively restrained as investors look ahead to Friday’s non-farm payroll figures, which are likely to provide a more important signal for the Federal Reserve’s policy outlook.
Meanwhile, with few major UK releases scheduled for the remainder of the week, Sterling could continue to take its direction from wider developments across global currency markets.
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Traders also focused on dynamics of debt markets. The yield of 30-year Treasuries tested new highs, climbing above the 5.64% level. The yield of 10-year Treasuries moved above the 5.28% level.
The technical picture remains unchanged as USD/JPY is stuck below the 50 MA at 157.56. If USD/JPY moves above the 50 MA, it will head towards the nearest resistance level at 158.00 – 158.50. A successful test of this level will push USD/JPY towards the next resistance at 160.00 – 160.50.
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Elevated U.S. inflation and frequent issuance of U.S. Treasuries have driven the 10-year U.S. Treasury note yield above 3.6% and put a lid on bonds, supporting the greenback. The U.S. Dollar is set for a strong month.
It is true that major rises in energy costs as a result of the conflict in Iran have hurt the euro recently. Along with rising geopolitical tensions, French bonds are once again far less attractive than their German counterparts, pushing yields up by 115 basis points. The euro looks set for its worst monthly performance against the dollar in over a year.
Looking at sterling, Britain’s budget deficit remains large, but recent actions by the government have signaled a greater commitment to reigning in spending. Along with signs of tighter spending, Bank of England data has shown that unsecured consumer lending picked up in August. This raises concerns about the health of the UK labor market, and further complicates the challenges posed by the Bank’s efforts to control inflation.
Looking at these factors, the dollar has a moderately bullish bias against the euro and a bearish bias against the pound. Major moves in either currency are expected to come from the release of the U.S. PCE report and the jobs report on Friday.
The pair’s price took advantage of the recurring negative pressure to confirm the bearish scenario previously suggested, continuing to form bearish waves and currently reaching 177.35, surpassing the first additional target proposed in the previous report.
The stability below the additional barrier at 179.45, combined with the main indicators maintaining negative momentum, these factors make us prefer more negative attempts, which could target 176.75. A break below this level could extend the losses toward 175.00 in the near term.
The expected trading range for today is between 176.75 and 178.50.
The Pound US Dollar (GBP/USD) exchange rate slipped lower on Tuesday as a subdued market mood continued to favour safe-haven currencies.
At the time of writing, GBP/USD was trading at around $1.3227, down approximately 0.2% from Tuesday’s opening levels.
The US Dollar (USD) edged higher on Tuesday as persistent strength in energy prices encouraged investors to favour defensive assets.
Brent crude continued to trade comfortably above $100 a barrel amid uncertainty surrounding attempts to bring the US-Iran conflict to an end and negotiations over the possible reopening of the Strait of Hormuz.
The ‘Greenback’ was also benefiting from firm Federal Reserve interest rate expectations, with markets pricing in around a 72% probability of another 25-basis-point rate increase in October.
However, USD gains remained relatively restrained in early Tuesday trade as investors looked ahead to the latest JOLTS job openings figures.
A weaker-than-expected reading could point to a cooling US labour market and prompt markets to scale back their expectations for further Fed tightening.
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The Pound (GBP) lacked a clear sense of direction on Tuesday, with Sterling moving within a narrow range as the UK economic calendar offered little in the way of fresh market-moving data.
Investors were also reluctant to make significant bets ahead of Prime Minister Andy Burnham’s keynote speech at the Labour Party conference.
Burnham is expected to discuss several long-running policy issues, including potential changes to the pension triple lock and his position on the UK’s relationship with the European Union.
Any comments on closer ties with the EU could attract attention from currency markets.
Near-Term GBP/USD Forecast: Core PCE Inflation in Focus
Looking ahead, the main catalyst for the Pound US Dollar (GBP/USD) exchange rate on Wednesday is likely to be the release of the latest core PCE price index.
The Federal Reserve’s preferred measure of underlying inflation is expected to show that price pressures increased again in August.
A stronger-than-expected reading could reinforce expectations of an October rate hike and provide further support for the US Dollar.
UK investors will also have the final estimate of second-quarter GDP to consider.
However, barring a significant revision to the previous reading, Sterling may remain more sensitive to broader shifts in global risk appetite than domestic economic developments.
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JOLTs Job Openings decreased from 7.335 million (revised from 7.271 million) to 7.079 million, compared to analyst forecast of 7.23 million.
Traders also had a chance to take a look at the CB Consumer Confidence report. The report showed that CB Consumer Confidence declined from 88.6 (revised from 89.4) in August to 81.9 in September, compared to analyst consensus of 89.2.
Currently, U.S. Dollar Index is trying to settle above the resistance level at 101.50 – 101.65. In case U.S. Dollar Index manages to settle above the 101.65 level, it will head towards the next resistance, which is located in the 102.35 – 102.50 range. RSI is in the overbought territory, but there is some room to gain additional upside momentum in the near term.
