Forex Signals Brief for July 18th – Sterling In Focus
Arslan Butt • 2 min read
Morning, traders. Though a bit late, here is our morning brief with a focus on the Pound. We have several economic events expected today, with the most important ones coming from the UK. The Asian session began with a weakness in the US dollar. This is because of the Reserve Bank of Australia's (RBA) recent optimistic attitude.
At today's meeting, the RBA highlighted its concern about rising divergences in the domestic economy. The RBA supported the Aussie by saying the second quarter outlook remains generally positive. So, in response to this, the investors moved to the Aussie to benefit from the news. To learn more about successfully trading to benefit from the news, refer to our FX Leaders article on news trading.
GBP – CPI y/y is scheduled to be released at 8:30 (GMT) with a neutral forecast of 2.9%. It's not expected to show any change. The CPI figure shows the change in the price of goods and services purchased by consumers.
At the same time, the PPI Input m/m is expected to be -0.8%, which is better than -0.1.3%. The PPI Input shows the change in the price of goods and raw materials purchased by manufacturers. They will obviously purchase more if there is more demand for finished goods.
Lastly, tBOE Gov Carney is due to speak at the unveiling of the new £10 note featuring Jane Austen, in Hampshire at 13:30 (GMT) on Tuesday. Although it may have a muted impact on the market, it is still worth watching.
GBP/USD – Pair In The Spotlight
In a couple of hours from now, we may see a huge round of investors entering the market to trade the Sterling. If so, it would be because of the CPI (consumer price index) data. Inflation has always played a significant role in moving the Sterling. It certainly yields quite a good number of pips. Inflation figures will have a notable short-term influence on the markets. They will also help us predict the potential outcome of the Bank of England's August policy meeting.
GBP/USD – 4-Hour Chart
Key Technical Drivers
– Technically, the GBP/USD is consolidating in the narrow trading range of $1.3040 – $1.3100.
– Looking at the RSI, the major pair is extremely oversold. It needs to come down to bring relief to sellers and to give bulls another entry.
– The pair has already completed 23.6% Fibonacci retracement at $1.3040 and the same level is working as a support. Read more about Fibonacci trading strategy to help you trade with oversold/bought markets.
GBP/USD Trading Idea
I highly suggest waiting for the release of the CPI figures before deciding on an entry point.
Positive CPI – Stay in buy above $1.3080 with a target of $1.3175.
Negative CPI – We need to see the CMP (current market price) in order to enter a sell with a target of $1.3045.
Good luck traders and make sure to follow money management strategies!