Should We Keep a Close Eye on the Direction of the Pound, Which Is Rebounding?

Should We Keep a Close Eye on the Direction of the Pound, Which Is Rebounding?

07.07.2022

Yesterday, the U.S. dollar showed strength against the euro, and the GBP/USD pair fell by approximately 110 pips from 1.0276 to 1.0161. The GBP/USD pair continues to decline along the 20-period moving average on the hourly chart and has been hitting new lows for the year.Since the pair has already entered a support-free zone on the weekly chart, we will need to monitor the situation closely to see whether the U.S. dollar’s strength will continue and drive the pair lower.

Among European currencies, the pound is trading lower amid mounting calls for British Prime Minister Johnson to step down; the GBP/JPY pair fell by about 2.1 yen, from 162.554 to 160.389.However, the pair has rebounded during today’s Asian trading session and has already broken above the 20-period moving average (MA). We will be closely monitoring whether it continues to rise and reaches the 200-period simple moving average (SMA) around 164.300.

Today’s schedule includes German industrial production and UK Halifax house prices at 15:00 Asia time; the release of the minutes from the ECB Governing Council meeting and U.S. Challenger job cuts at 20:30 Europe time; and Canadian trade balance at 21:30 U.S. time,U.S. initial jobless claims and U.S. trade balance; at 22:00, remarks by a member of the Bank of England’s MPC; at 23:00, the Canadian Ivey PMI; at 23:30, U.S. weekly natural gas inventories; at 24:00, U.S. weekly crude oil inventories;at 25:05, remarks by UK MPC member Pill; and at 26:00, remarks by U.S. Federal Reserve Bank of St. Louis President Bullard are scheduled. We will be closely monitoring the direction of the pound, which is rebounding and rising.