GBP Crosses Sitting at Support Following BoE- U.K. 2Q GDP in Focus

Talking Points:

- GBP/USD Holds Near-Term Support Despite Unanimous BoE Vote

- NZD/USD Outlook Hinges on Reserve Bank of New Zealand (RBNZ) Outlook

- USDOLLAR Topping Process Remains in Focus; 10,470 in View

GBP/USD:

• Slips to a fresh weekly low of 1.7022 as Bank of England (BoE) Minutes shows a 9-0 vote to retain current policy.
• Sitting at key Fibonacci confluence around 1.7020-30; lower-high in place?
• Markets turning attention to the BoE Inflation report due out on August 13 as there appears to be a growing rift within the Monetary Policy Committee (MPC).
• DailyFX Speculative Sentiment Index (SSI) continues to show net-short positioning in GBP/USD as the ratio stands at -2.6125.

NZD/USD:

• Reserve Bank of New Zealand (RBNZ) is widely expected to deliver another 25bp rate hike, but forward-guidance for monetary policy will be key focus.
• Need greater willingness from RBNZ Governor Graeme Wheeler for another rate hike later this year.
• According to Credit Suisse Overnight Index Swaps (OIS), 12-month expectations show the cash rate increasing by 70bp.

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USDOLLAR Daily

Chart - Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

• Dow Jones-FXCM U.S. Dollar Index remains at risk of a near-term topping process as it retains the descending channel from earlier this year.
• Will need to see another close above 10,440 (78.6% Fibonacci retracement) to look for a more meaningful run at the 10,470 pivot.
• A bearish break in the Relative Strength Index (RSI) may suggest that a lower-high is in place.
• Interim Resistance: 10,508 (61.8% retracement) to 10,524 (38.2% retracement)
• Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)

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--- Written by David Song, Currency Analyst

To contact David, e-mail [email protected]. Follow me on Twitter at @DavidJSong.

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