GBP/USD Daily Analysis – August 30, 2017

Sterling struggling to keep upside move

What’s in the News?

The yearly growth of house price diminished during the month of July and August from 2.9% to 2.1%. In the recent months, there was a decline in the house price growth to 2-3% from 4-5% which was obtained in the year 2016. The year 2016 obtained a wider economy as the housing market was consistent. In the first half of 2017, the economy grew by 0.3% per quarter resulting the number of mortgages who approved for house purchase diminished to a nine-month low of 65,000 during the month of June. The report also states that the surveyors relieved in the number of new buyer enquires. It is quite surprising even though the labour market is strengthening regardless of the slowdown in the housing market.

Consumer spending, Manufacturing and Economic activity can take a strike in that part of the country. The World’s largest hedge funds in the North Korea are now taking measures to protect their portfolios ahead of the severe consequences which they will face. Two explanations can only be taken from the U.S assets reversal. One is, the market is expecting that Trump will make a strong and convincing announcement on Tax Reform today. Another is that, the market will be happy for the time being as Trump’s focus is on Houston and not on organizing military action against North Korea. Also, ADP and revisions to second-quarter will be released today.

According to the recent historical standards, the unemployment rate in the U.S is relatively low. This means higher inflation is about to happen and this is the reason for the Fed raising the U.S policy rate.

What do the Charts Say?

Daily bias in GBP/USD remains bearish with 1.2959 resistances intact. A deeper decline is still expected for the pair as long as resistances holds the area and the price action stays below resistances. At this point, such decline is viewed as a correction. Thus, we’d expect resistance to hold the area. The pair remains bearish with a break of 1.2931 indicating the near term bearish reversal has taken place. The pair turns outlook to continue with the downside bias. The pair indicates a reversal bearish movement with rejection at resistance area closed below the trend line and stochastic oscillator currently at 20.0 levels. The pair closed below the rejection of trend line. This is a clear indication of trend reversal shifting the momentum. The current development suggests that the medium term downside is expected further low and focus shall be at 1.2911. The pair breaking here should make lower lows with 1.2866 levels. However, the pair needs the break of the 50EMA for confirmation.

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