GBP/USD looks to PMI data, financial stability report
GBP/USD is edging lower, paring earlier gains, on resurgent USD demand ahead of PMI data and the financial stability report.
The services PMI is expected to confirm the preliminary print of 53.1 in June and comes after the manufacturing PMI was downwardly revised to show the weakest growth in 2 years.
The BoE’s semi-annual financial stability report could catch investors’ attention, which should address how banks and consumers cope with higher interest rates.
BoE’s Tenreyo, a known dove, will speak later in the session.
Meanwhile, the USD has jumped higher after a subdued start to the week. Factory orders data is the main release stateside.
Where next for GBP/USD?
GBP/USD trades below the 20 & 50 sma and falling trendline. GBP/USD failed to rise above support at 1.2150, which, combined with the bearish RSI, keeps sellers hopeful of further downside. Sellers need to break below support at 1.1975, the June low, to 1.1935, the 2022 low. Beyond here, the 1.19 round figure comes into focus.
Buyers will look for a move over 1.2160, the May low, and yesterday’s high, exposing the 20 sma at 1.2250 and 1.2370 the 50 sma. It would take a move over 1.2430 the June 16 high to create a higher high.
CAC 40 rises ahead of PMI, French industrial production data
The French index is pushing higher in early trade, boosted by the risk-on mood in the market. Upbeat Chinese service sector data combined with news that Biden is considering rolling back some tariffs on China is helping buoy sentiment, even as recession fears linger.
Attention now moves to the PMI data that will be released for France and the eurozone as a whole. French industrial production is also due to be released.
Despite the improved mood, concerns over the economic outlook remain as energy prices rise amid a tightening global financial conditions.
The minutes of the latest ECB meeting will be released tomorrow.
Where next for the CAC?
The CAC rebounded from support at 5830 but ran into resistance at the 20 sma, which has capped the upside in recent weeks. Meanwhile, a multi-month rising trendline support has been limiting losses.
The RSI is in bearish territory, so it supports further downside. Sellers need to break below 5860 the rising trendline support to test 5750, the 2022 low.
Buyers will need to rise above the 20 sma at 6025 to bring 6150, the late June high, into play and create a higher high.