Daily Forex News and Watchlist: GBP/USD


 Flash PMI readings are due from the U.K. and the U.S. in a few hours!

Can these be enough to spur a triangle breakout on GBP/USD?

Before moving on, ICYMI, yesterday’s watchlist looked at a pullback on NZD/CHF after the SNB decision. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

BOE hiked interest rates by 0.25% as expected to 4.25% in a 7-2 vote, but Governor Bailey warned that inflationary pressures could tumble for the rest of the year

U.S. initial jobless claims came in at 191K vs. estimated 198K increase in unemployment and previous 192K gain

U.S. February new home sales came in at 640K vs. estimated 650K reading, still higher than earlier downgraded figure from 670K to 633K

U.S. conducted airstrikes against Iranian facilities in Syria in response to a series of attacks

Eurozone consumer confidence index held steady at -19 vs. expected improvement to -18 in March, well below long-term average

U.S. Treasury Secretary Yellen assured that regulators are prepared for further steps to support the banking sector if needed

Australia’s flash manufacturing PMI for March fell from 50.5 to 48.7 to reflect industry contraction, as demand conditions deteriorated

Australia’s flash services PMI for March tumbled from 50.7 to 48.2 to signal contraction, as higher costs weighed on new business activity

Japanese national core CPI fell from 4.1% to 3.3% year-over-year in February, headline rate fell from 4.3% to 3.3% vs. projected 4.1% reading

U.K. GfK consumer confidence index rose from -38 to -36 vs. estimated -35 figure for March, still a rebound off historic lows as measures for personal financial situation and general economic situation improved

Japanese flash manufacturing PMI increased from 47.7 to 48.6 to reflect slower pace of contraction vs. estimated 48.2 figure in March, as output increased at fastest rate in nine months

U.K. retail sales surged 1.2% month-over-month in February vs. projected 0.2% uptick, previous reading upgraded to show 0.9% growth from initially reported 0.5% increase

Price Action News

The dollar followed through on its post-FOMC selloff for the most part of the day, before bottoming out and finding some relief from Yellen’s remarks.

After clarifying that the government is not mulling a “blanket” insurance for deposits in an earlier speech, Yellen sought to reassure markets by saying that regulators are still prepared to roll out measures to support the banking sector if warranted.

The U.S. currency managed to hold on to most of its gains and add a bit more during the Asian session, although USD/JPY veered away from the pack when Japan printed a sharp drop in inflation.

Upcoming Potential Catalysts on the Economic Calendar:

Eurozone flash manufacturing and services PMIs at 9:00 am GMT

U.K. flash manufacturing and services PMIs at 9:30 am GMT

Canadian headline and core retail sales at 12:30 pm GMT

U.S. durable goods orders data at 12:30 pm GMT

U.S. flash manufacturing and services PMIs at 1:45 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

GBP/USD: 15-min

GBP/USD 15-min Forex ChartGBP/USD 15-min Forex Chart by TradingView

Both the Fed and BOE dropped hints that they’re about to reach the end of their tightening cycle pretty soon, which is probably why Cable is stuck in a consolidation pattern.

The pair formed lower highs and found support around the 1.2265 level, creating a descending triangle on its short-term chart.

The upcoming flash PMI reports from both economies might have more clues on which central bank could keep hiking for longer, possibly resulting to a triangle breakout soon.

A break below support could set off a drop to the S2 (1.2210) of the pair’s Standard Pivot Points, which is well within the average GBP/USD daily volatility of 114 pips.

Declines are eyed for Uncle Sam’s manufacturing and services PMIs while the U.K. could see mixed results. Note also that the U.K. has just printed surprisingly strong CPI readings earlier this week, so pound bulls might have enough to go on.

With that, a bullish triangle breakout could be a stronger possibility, taking Cable up to the previous day highs at 1.2340 near R2.

Also note that banking sector jitters have been hitting U.S. markets harder, despite officials’ best efforts to reassure that backstop measures are in their arsenal.