GBP/USD Today – Outlook 2012/10/02

October 2, 2012 in Forex Analysis

GBP/USD had jumped up strongly to 1.6175 but then went down to 1.6109 before going into sideways mode.

There is no change in our outlook as of now and it stays good as we had mentioned yesterday in the post GBP/USD Today – Outlook 2012/10/01.

GBP (UK Data):

 

1) Manufacturing PMI data from UK was weaker than expected and also less than the previous. Markit Manufacturing PMI for September was 48.4 against the consensus of 49.0 and previous 49.5.

2) Mortgage approvals at 47.665K were slightly better than the previous 47.556K but quite less than the expected 49.000K.

3) Consumer Credit data was better than the previous but again quite poor than was being expected.

4) Net Lending to Individuals came up quite poor at GBP -0.4B against the previous 0.6B British Pounds.

USD (US Data):

 

1) Though the Markit Manufacturing PMI was slightly weaker at 51.1 against the previous 51.5 but the more important ISM Manufacturing PMI data was quite good at 51.5 against the expectations of 49.7 and previous release of 49.6.

2) ISM Price Paid data was also good at 58.0 against the consensus of 55.5 and previous 54.0.

3) Construction Spending was down to -0.6% from the previous -0.4%. The consensus were 0.5%.

Conclusion:

As far as yesterday’s economic releases are concerned there was nothing which indicated something greatly in favor of GBP to indicate further immediate gains. And that leaves us to technical and price action side:

GBP/USD Technical Aspects and Price Action:

GBP/USD Daily Chart

GBP/USD daily chart - October 2 2012

We will touch upon the price action first.

1) As mentioned in yesterday’s post that the recent strong upward move and then the failure at 1.6309 followed by the sideways move below that level indicate that we can safely expect a downward consolidation towards 1.6000 or even towards 1.5950/1.5965. 1.6000 represents the current 55-day EMA support and 1.5965/1.5950 would complete 38.2% retracement.

2) The daily candle’s wide difference in the high and the subsequent retracement indicate a lack of  short-term bullish mood.

3) The bullish gap between 5-day EMA and 22-day EMA has narrowed down sharply. Even though no bearish crossover has yet taken place but it seems to be on the way.

4) Daily MACD had crossed below the signal line and remains below it with a wide bearish gap. The weekly MACD is over the signal line to indicate an overall bullish setup.

What to Expect from GBP/USD:

 

As mentioned that we expect some more consolidation towards at least 1.6020 and more. This outlook will remain in place untill no break over 1.6175/1.6180 takes place. A break below 1.6109/1.6105 will act as a better confirmation of this outlook.

 

1 response to GBP/USD Today – Outlook 2012/10/02

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