GBPUSD tumbles over 1.5% against the dollar
Gary Christie September 11, 2020 6:42 AM
The pair breaks its uptrend on escalating Brexit tensions.
The US Dollar was bullish against most of its major pairs on Thursday with the exception of the CHF, JPY and EUR. On the US economic data front, the Producer Price Index Final Demand increased 0.3% on month in August (+0.2% expected), compared to +0.6% in July. Initial Jobless Claims remained at 884K for the week ending September 5th (850K expected), in line with a revised reading from the week before. Continuing Claims unexpectedly rose to 13,385K for the week ending August 29th (12,904K expected), from a revised 13,292K a week earlier. Finally, Wholesale Inventories declined 0.3% on month in the July final reading (-0.1% expected), compared to -0.1% in the July preliminary reading.
On Friday, the Consumer Price Index for August is expected to rise 0.3% on month, compared to +0.6% in July. Finally, the Monthly Budget Deficit for August is expected to spike to 235.4 billion dollars on month, from 63.0 billion dollars in July.
The Euro was bullish against most of its major pairs with the exception of the CHF. In Europe, the European Central Bank has kept its interest rates unchanged. In addition, the institution maintained the amount of its pandemic emergency purchase program (PEPP) at 1.350 billion euros. The ECB expects GDP for the euro zone to decline by 8% in 2020, compared to 8.7% previously, followed by growth of 5.0% in 2021 (+5.2% previously anticipated) and 3.2% (+3.3 previously anticipated) in 2022. Inflation is seen at 0.3% in 2020 (as previously), 1% in 2021 (against +0.8% initially expected) and 1.3% in 2022 as in the last estimate. In addition, France's INSEE has posted July industrial production at +3.8% (vs +5.0% on month expected).
The Australian dollar was bearish against most of its major pairs with the exception of the NZD and GBP.
A large move happened in the GBP/USD falling 203 pips to 1.2799 in Thursday's trading. The pair broke a key rising supporting trendline in place since March lows and is now testing overlap support at the 1.275 area. A break below 1.275 would put further pressure on the pair down towards 1.251 and 1.2245 in extension.
Source: GAIN Capital, TradingView
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.