GBPUSD WEEKLY ANALYSIS – Trading Within Strong Uncertainties

GBPUSD WEEKLY ANALYSIS – Trading Within Strong
Uncertainties     

Following the previous report on GBP/USD, the pair formed a downward
trend following the shooting star formation towards the 38.2 Fibonacci level
near 1.2250. However, the pair managed to break above the downward trend-line
in early July. The pair currently trade between its 61.8 Fibo level near 1.2710
and 50.0 Fibo level near 1.2480. Recent candlestick patterns in the chart
showed strong uncertainties, with formation of hammer on one day and an
inverted hammer on the other.    

In terms of MACD, overall momentum showing bearish biased; where a death
cross formation requires the pair to break below the 50.0 Fibo for further
downward confirmation. Price action is also traded within the tight ranges of
its EMA. Further trend confirmation requires the breakout from either side of
the 61.8 and 50.0 Fibo.    

From the fundamental front, this week’s economic data from the
country showed signs of recovery, with manufacturing production climbing higher
to 8.4% compared to economists’ forecast of 8.0%. Consumer spending was also
picking up after the nation’s Consumer Price Index (CPI) rose by 0.3% to 0.1%
for the month of June. For the labor market, Claimant Count Change – an
indicator measuring the increase in unemployed people, fell by 28K.

From the results of this week’s economic data, the country showed
strong rebound in terms of jobs and overall economy as number of COVID-19 cases
reduce while the country re-opens its economy. However, without a vaccine,
uncertainties around the pandemic continues to haunt the market. Furthermore,
Brexit also added further uncertainties for the currency as the UK and EU plans
to intensify negotiations in July.

As a summary, both technical and fundamental front are providing
unclear signals for the pair’s movement. Prices are expected to fluctuate
between the 61.8 and 50.0 Fibo boundaries until clearer signal appears in the
market.