CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

UK data dumped GBP weaker

March 24, 2021 9:41 AM

UK data dumped! GBP weaker

Earlier in the week, we discussed the upcoming data releases for the UK.  The data has been released and the GBP/USD is not taking it so well.  The Claimant Count Change for February was +86,600 was -17,000 expected.  In addition, today’s CPI data was worse than expected, with headline CPI for February (MoM) of 0.1% vs 0.5% expected.  That left the YoY rate at 0.4% vs and expectation of 0.8% and a previous reading of 0.7%! The core inflation rate (MoM) was just as bad, coming in  a 0% vs 0.5% expected!  The only bright spot the PMI data.  Both Manufacturing and Services PMIs were much stronger than expected, resulting in a composite print of 56.6 for February vs 51.1 expected and 49.6 last!  However, although GBP/USD bounced after the PMIs, the employment and inflation data seems to be overshadowing the PMI data, as the pair remains weak.

Have a look at some of the more common economic indicators

GBP/USD had been rangebound between 1.3800 and 1.4000.  We speculated that the next direction in the pair could be dependent on the data. The weaker employment pushed GBP/USD below 1.3800 and the ensuing CPI data helped the pair move to 1.3670 before bouncing.  Just below is horizontal support near 1.3650.

Source: Tradingview, City Index

On a daily timeframe, note that GBP/USD broke below confluence of support, below the upward sloping bottom trendline and horizontal support.  The next level of support is the 38.2% Fibonacci retracement level from the September 23, 2020 lows to the February 24th highs near 1.3636.  Below there is horizontal support near 1.3556 and the 50% retracement level from the same timeframe near 1.3450. Resistance is at the previous confluence breakdown near 1.3756, the March 5th lows near 1.3778, and a series of horizontal resistance levels between 1.3800 and 1.4000.

Source: Tradingview, City Index

The bullish US Dollar over the past few days hasn’t helped GBP/USD either.  The DXY moved from roughly 91.80 to 92.60 over the same time period. 

If the US Dollar continues to rise, comments for BOE officials remain dovish, or poor inflation and employment data continue to come out of the UK, GBP/USD may have more room to go on the downside.

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024