Chart of the Day: Spot GBP/USD (11/08/2020) | alb.com
Today’s economic data announcements provides a mixed picture of the U.K economy with the U.K. Average Earnings Index +Bonus (Jun) (-1.2 vs. -1.1) and Claimant Count Change (Jul) (94.4K vs. 10.0K). We do know that GDP has been revised lower and any sort of economic recovery is most likely to begin in 2021. The U.K. economy has been severely affected from the coronavirus pandemic as well as the uncertainty surrounding Brexit. The resurgence we have seen thus far in the British Pound is mainly due to U.S. Dollar weakness as they contend with growing friction in the U.S. – China relations, increased number of coronavirus cases, devaluation of the U.S. Dollar as the U.S. Federal Reserve continue to print money to shore up their economy as unemployment hit record levels and unemployment benefits go into in the trillions.
German ZEW Economic Sentiment (Aug) is scheduled to be announced later this morning with the previous figure at 59.3 and the forecast at 58.0. The Geman Dax is up over 200 points this morning and if better than expected numbers are announced, this could potentially signal that economic recovery in the Eurozone might be much sooner than expected. This will be extremely positive for the Euro which will add downward pressure on the U.S. Dollar. The Dollar Index has erased yesterday’s gains, where it closed at 93.58 and currently trading at 93.45. GBPUSD is in a trading range, where we see a rejection of lower prices from 1.3060 – 1.2981 and a rejection of higher prices from 1.3138 - 1.3185. Due to the mixed outlook for today’s U.K. data, I expect a continuation of the range trading and better than expected ZEW economic sentiment data might be the catalyst to move the GBPUSD towards 1.3138. However, the medium outlook for the British Pound remains bearish.
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