Fundamental Analysis of GBP/USD for October 16, 2018
GBP/USD has been quite impulsive with recent bullish gains, which led the price to trade inside the resistance area of 1.3200-1.3300 currently. GBP has been picked up steam amid on the back of positive economic reports, supporting the bullish gains in the process. On the other hand, USD is still struggling amid the fundamentals.
After an optimistic statement from Prime Minister Theresa May about upcoming developments in the UK economy, GBP managed to gain ground against USD in a significant way. Moreover, today the UK Average Earning Index report was published with an increase to 2.7% which was expected to be unchanged at 2.6% while the Unemployment Rate remained unchanged at 4.0%.
On the other hand, after downbeat CPI and Retail Sales reports from the US, USD is struggling to gain momentum over GBP. Despite the better-than-expected economic data today, USD failed to counter GBP gains that is expected to lead to certain indecision and volatility in the coming days. Today US Industrial Production report was published better than expected at 0.3%, though decreasing slightly from the previous value of 0.4% but performing better than the expectation of 0.2%, and JOLTS Job Opening also increased to 7.14M from the previous figure of 7.08M which was expected to decrease to 6.90M. Additionally, US NAHB Housing Market Index report was published with an increase to 68 as expected from the previous figure of 67 and Capital Utilization Rate was unchanged at 78.1% which was expected to increase marginally to 78.2%.
Meanwhile, positive economic reports from the UK helped the currency to gain certain momentum over USD for a while. On the other hand, positive economic US reports suggest a counter move. Ahead of US economic reports on Housing Starts and FOMC Meeting minutes, certain volatility and gains on the USD side may observed if readings remains positive consistently.
Now let us look at the technical view. The price is currently holding at the edge of resistance area 1.32 after recovering from a Bearish Gap at the start of the week. Though the price is being held by the dynamic level of 20 EMA as support, as the price remains below 1.3300 area, certain bearish pressure may occur with a target towards 1.3050 and later towards 1.2850 in the future. Otherwise, a break above 1.3300 will lead to further bullish gains.
SUPPORT: 1.2850, 1.3050
RESISTANCE: 1.3200, 1.3300