Seeking Stability: GBP's Attempt to Recover Amid Market Conditions

GBP's Struggle Amidst Housing Surprises and Muted FX Markets

Key Highlights:

• GBP's Resilience: Attempts to find support post-housing price surprises.
• Quiet FX Markets: Limited impact from recent events; focus turns to the US.
• BoE Repricing Dynamics: 'Dovish' repricing and anticipation of GDP and jobs reports.

The GBP is grappling with a downturn but shows signs of seeking support, particularly following an unexpected uptick in housing prices MoM (see economic calendar). FX markets remain relatively quiet, lacking impactful economic data before tomorrow's NFP report. After weak UK construction PMI figures and minimal impact from Bank of England Governor Andrew Bailey, attention shifts to the US for market cues.

BoE Repricing and Future Indicators

Money market pricing for the BoE (displayed below) has undergone a 'dovish' repricing. With only UK GDP and jobs reports preceding the next interest rate announcement, these data points will wield significant influence on future pricing.

In summary, the GBP's journey to stability hinges on housing trends, while eyes remain on the US for broader market cues. The upcoming UK economic reports will play a pivotal role in shaping future pricing.

Technical Market Outlook:

The GBP/USD pair has been seen testing the key short-term technical support located at the level of 1.2550. The local low was made at the level o 1.2545, but the market bounced strongly off the lows. Any violation of this level would open the road towards the next technical support seen at the level of 1.2455, which is 100 pips lower. The zone between the levels of 1.2571 - 1.2545 is the key short-term demand zone, so bulls need to protect it. The momentum remains weak and negative on the H4 time frame chart as the bears are in control of the market. The RSI indicator is getting closer to the extremely oversold market conditions on the H4 time frame chart. Only a sustained breakout back above the level of 1.2726 would change the outlook to more bullish, with a possible attack on the last swing high at 1.2732.

Weekly Pivot Points

• Resistance Levels: WR3 at 1.2908, WR2 at 1.2820, WR1 at 1.2766.
• Pivot and Support Levels: Weekly Pivot at 1.2678, WS1 at 1.2624, WS2 at 1.2536, WS3 at 1.2482.

Trading Outlook

On the weekly chart, a Bullish Engulfing pattern signals bullish dominance, trading above the 50-week moving average. A breakout below 1.1802 could lead to a substantial downward movement, targeting 1.1494.

Intraday Indicator Signals

• Technical Indicators: 14 Buy, 4 Neutral, 3 Strong Sell.
• Moving Averages: 10 Buy, 8 Sell.

Sentiment Scoreboard

The general sentiment is bullish (58% bulls vs. 42% bears). Weekly sentiment remains bullish (57% bulls vs. 43% bears), and the last three days show a bullish sentiment (53% bulls vs. 47% bears).

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Important Reminder

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

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