Double Bottom Pattern to Underpin GBP/USD – Quick Outlook Today
Skerdian Meta • 2 min read
The GBP/USD continues to recover from a three-week low. During Wednesday’s mid-Asian session, it rose 0.11% to near 1.2190. In doing so, the cable pair applauds the broad-based US dollar decline as recession fears fade.
In other news, the US Dollar Index (DXY) fell 0.67% intraday to 103.95, the most in a week, as traders worried that the BOJ’s action would lead to less Japanese bond buying from the US.
It is worth remembering that Japan is the largest holder of US Treasury bonds. The recent decision allows Tokyo to invest more money in the country rather than allowing it to flow out. But the 10-year counterpart grew more than the 2-year counterpart. This made the yield curve inversion less likely, which means a recession is less likely.
It should be noted that the disappointing US housing statistics helped the GBP/USD pair to remain firmer before the recent mild run-up.
Regarding data, US housing starts fell by 0.5% MoM in November, following a 2.1% drop in October, while building permits fell by 11.2%, compared to a 3.3% drop the previous month. Furthermore, the German Producer Price Index (PPI) for November fell to -3.9% YoY, compared to -2.6% market forecasts and -4.2% previously.
While expressing the mood, US 10-year Treasury yields are grinding near a three-week high of 3.69%, while two-year bond coupons remain firmer, hovering around 4.26% at press time. Furthermore, Wall Street closed in the green, helping stocks in the Asia-Pacific region to post modest gains recently.
Looking ahead, the United States Conference Board (CB) Consumer Confidence figures for December, which are expected to be 101.00 versus 100.00 previously, will be combined with UK political updates to direct short-term GBP/USD movements. Major attention will be paid to Thursday’s UK GDP figures and Friday’s US Core PCE Inflation data for clear direction.
GBP/USD Technical Outlook
The GBP/USD pair tested the bullish channel’s support line and maintained its stability above it, allowing positive trades and attempts to move away from it to keep the bullish trend scenario valid for today, backed by stochastic positivity, trying to remind you that our next target is located at 1.2330, with achieving it requiring holding above 1.2105.
Today’s trading range is predicted to be between 1.2060 support and 1.2240 resistance.
Today’s projected trend: Neutral