Daily Analysis For GBP/USD 15-06-2023

Daily Analysis For GBP/USD 15-06-2023

GBP/USD Analysis


Key Points: -


·       The GBP/USD currency pair encountered selling pressure on Thursday, influenced by a slight uptick in the US Dollar.


·       The US Dollar received support from the Federal Reserve's indication that interest rates will increase by an additional 50 basis points (bps) in 2023.



·       Expectations of a more aggressive tightening of monetary policy by the Bank of England (BoE) should help restrict losses for the major currency pair.


Today's Scenario: -


During the Asian session on Thursday, the GBP/USD pair slightly declines, moving further away from its highest level since April 2022, which was reached around the 1.2700 level the previous day. Currently trading just below the mid-1.2600s, the pair is down approximately 0.15% for the day. However, the overall fundamental backdrop still favors bullish traders.


The US Dollar (USD) strengthens slightly and seeks to build upon its overnight rebound from a one-month low. This upward movement acts as a headwind for the GBP/USD pair. The modest increase in the USD can be attributed to the Federal Reserve's (Fed) hawkish stance and their intention to resume the cycle of raising interest rates. The Fed signaled that borrowing costs will rise by an additional 50 basis points (bps) by the end of December. During the post-meeting press conference, Fed Chair Jerome Powell stated that the decision to pause the rate hikes was a cautious approach to gather more information before determining the need for further rate increases.


Furthermore, Powell expressed that the US economy and job market are performing better than anticipated. This statement increases market expectations for a 25 bps rate hike at the July Federal Open Market Committee (FOMC) policy meeting, which attracts buyers to the USD. However, the downside for the GBP/USD pair is cushioned by the belief among market participants that the Bank of England (BoE) will pursue a more aggressive policy tightening approach to control persistently high inflation. This belief was reinforced by positive UK jobs data released on Tuesday, which revealed near-record wage growth and a lower unemployment rate.


As a result, the path of least resistance for the GBP/USD pair appears to be to the upside, supporting the potential for an extension of the recent upward trend observed over the past three weeks. Traders are now turning their attention to the US economic calendar, which includes the release of monthly Retail Sales, the usual Weekly Initial Jobless Claims, the Empire State Manufacturing Index, the Philly Fed Manufacturing Index, and Industrial Production figures. This data could influence the price dynamics of the USD later in the early North American session, presenting short-term trading opportunities around the major currency pair.


Diagram of GBP/USD: -


Economic Events: -


Date      Event                                                                                            Impact        Currency

0:00      (United States) Fed Press Conference                                              High  USD

4:15      (New Zealand) GDP Growth Rate YoY                                         Medium NZD

4:15      (New Zealand) GDP Growth Rate QoQ                                       Medium NZD

5:20      (Japan) Foreign Bond Investment                                       Low  JPY

5:20      (Japan) Stock Investment by Foreigners                                           Low  JPY

5:20      (Japan) Machinery Orders YoY                                                   Medium   JPY

5:20      (Japan) Machinery Orders MoM                                               Medium   JPY

5:20      (Japan) Imports YoY                                                                           Low     JPY

5:20      (Japan) Balance of Trade                                                    High    JPY

5:20      (Japan) Exports YoY                                                                    Medium     JPY

5:30      (Euro Area) Eurogroup Meeting                                                Medium   EUR

7:00      (Australia) Consumer Inflation Expectations                      Low AUD

7:00      (Australia) Part Time Employment Chg                                      Medium AUD

7:00      (Australia) Participation Rate                                                             Low   AUD

7:00      (Australia) Full Time Employment Chg                                       Medium AUD

7:00      (Australia) Unemployment Rate                                                       High   AUD

7:00      (Australia) Employment Change                                                       High   AUD

7:00      (Australia) RBA Bulletin                                                              Medium    AUD

7:00      (China) PBoC 1-Year MLF Announcement                         Low CNY

7:00      (China) House Price Index YoY                                                     Medium  CNY

7:30      (China) Unemployment Rate                                                            High   CNY

7:30      (China) Retail Sales YoY                                                                      High    CNY

7:30      (China) Industrial Production YoY                                       High CNY

7:30      (China) Fixed Asset Investment (YTD) YoY                   Medium CNY

9:05      (Japan) 3-Month Bill Auction                                                              Low  JPY

10:00    (Japan) Tertiary Industry Index MoM                                                  Low JPY

10:00    (Netherlands) Unemployment Rate                                Medium EUR

10:30    (Finland) GDP YoY                                                                                 Low   EUR

12:00    (Switzerland) Producer & Import Prices MoM                                  Low CHF

12:00    (Switzerland) Producer & Import Prices YoY                       Low CHF

12:15    (France) Inflation Rate MoM                                                      Medium   EUR

12:15    (France) Inflation Rate YoY                                                         Medium   EUR

12:15    (France) Harmonised Inflation Rate MoM                         Low EUR

12:15    (France) Harmonised Inflation Rate YoY                                           Low  EUR

13:30    (Spain) Balance of Trade                                                             Medium    EUR

14:10    (Spain) Obligacion Auction                                                    Low   EUR

14:10    (Spain) Bonos Auction                                                                        Low    EUR

14:30    (Euro Area) Balance of Trade                                                      Medium  EUR

14:30    (France) 5-Year OAT Auction                                                               Low  EUR

14:30    (France) 3-Year OAT Auction                                                               Low  EUR

14:30    (Greece) Construction Output YoY                                      Low EUR

14:30    (Montenegro) Inflation Rate YoY                                                       Low   EUR

14:30    (Montenegro) Harmonised Inflation Rate YoY                                  Low EUR

14:30    (Montenegro) Inflation Rate MoM                                     Low  EUR

15:00    (Belgium) Construction Output YoY                                     Low  EUR

15:30    (France) 10-Year Index-Linked OAT Auction                       Low EUR

15:30    (Ireland) Balance of Trade                                                    Low   EUR

16:00    (Portugal) Economic Activity YoY                                                      Low   EUR

16:00    (Portugal) Private Consumption YoY                                                  Low EUR

17:45    (Canada) Housing Starts                                                              Medium   CAD

17:45    (Euro Area) ECB Interest Rate Decision                                            High  EUR

17:45    (Euro Area) Marginal Lending Rate                                     Low  EUR

17:45    (Euro Area) Deposit Facility Rate                                                      High   EUR

18:00    (Canada) Manufacturing Sales MoM                                                Low  CAD

18:00    (United States) Import Prices YoY                                       Low  USD

18:00    (United States) Export Prices YoY                                       Low  USD

18:00    (United States) Import Prices MoM                               Medium USD

18:00    (United States) Export Prices MoM                             Medium  USD

18:00    (United States) NY Empire State Manufacturing Index              Medium USD

18:00    (United States) Retail Sales YoY                                                       High    USD

18:00    (United States) Retail Sales Ex Autos MoM                      High USD

18:00    (United States) Retail Sales MoM                                      High  USD

18:00    (United States) Philly Fed Business Conditions                                Low USD

18:00    (United States) Philly Fed Employment                                            Low  USD

18:00    (United States) Philly Fed CAPEX Index                                             Low  USD

18:00    (United States) Philly Fed Prices Paid                                                Low  USD

18:00    (United States) Philly Fed New Orders                                              Low  USD

18:00    (United States) Philadelphia Fed Manufacturing Index              Medium             USD

18:00    (United States) Jobless Claims 4-week Average                              High USD

18:00    (United States) Continuing Jobless Claims                        High USD

18:00    (United States) Initial Jobless Claims                                                High  USD

18:00    (United States) Retail Sales Ex Gas/Autos MoM                             High USD

18:15    (Euro Area) ECB Press Conference                                     High  EUR

18:30    (Belgium) Balance of Trade                                                                Low    EUR

18:30    (Kosovo) GDP Growth Rate YoY                                                        Low    EUR

18:45    (United States) Capacity Utilization                                     Low  USD

18:45    (United States) Manufacturing Production YoY                               Low USD

18:45    (United States) Industrial Production YoY                  Medium USD

18:45    (United States) Industrial Production MoM               Medium USD

18:45    (United States) Manufacturing Production MoM                            Low USD

19:30    (United States) Business Inventories MoM                Medium USD

19:30    (United States) Retail Inventories Ex Autos MoM                            Low USD

20:00    (United States) EIA Natural Gas Stocks Change                                Low USD

21:00    (United States) 8-Week Bill Auction                                     Low  USD

21:00    (United States) 4-Week Bill Auction                                     Low  USD

21:05    (United Kingdom) BoE Cunliffe Speech                                             Low  GBP

21:30    (Canada) 2-Year Bond Auction                                                          Low    CAD

21:30    (United States) 15-Year Mortgage Rate                                            Low  USD

21:30    (United States) 30-Year Mortgage Rate                                            Low  USD



Buy Scenario: -


For the Pound to maintain its upward momentum, it needs to stay above the pivotal level of 1.2655 and aim for the First Major Resistance Level (R1) at 1.2710. If the Pound manages to surpass Wednesday's high of 1.2674, it would indicate a continuation of the breakout trend. However, this would require positive economic indicators from both the UK and the US, as well as support from the Federal Reserve (Fed), to sustain the breakout.


In the event of a strong rally, the GBP/USD pair would likely test the Second Major Resistance Level (R2) at 1.2753, with the Third Major Resistance Level (R3) located at 1.2808. Till we do not advise to buy GBP/USD.


Sell Scenario: -


On the downside, if the Pound falls below the pivot level, it could target the First Major Support Level (S1) at 1.2612. However, unless there is a significant sell-off fueled by the Fed, it is expected that the GBP/USD pair will remain above the key level of $1.26 and the Second Major Support Level (S2) at 1.2558. The Third Major Support Level (S3) is situated at 1.2514. Till then we do not advise selling GBP/USD.


Support and Resistance Level: -


Support            Resistance  

 S1 1.2612  -    R1 1.2710

 S2 1.2558  -   R2 1.2753

 S3 1.2514  -   R3 1.2808


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