At Wednesday's Asian session GBP/USD is retreating from the record low updated the day before and heading towards resistance at 1.1700, having taken advantage of the slight weakening of the US dollar exchange rate.
Investors started closing longs on USD, since there is a lot of important news coming out this week, which can influence the dynamics of currency assets. A report on American labor market from ADP will be released today and Non-farm Payrolls on Friday. The labor market outlook is optimistic, which will allow the Fed to continue its aggressive tightening of monetary policy. The probability of a 75 basis point rate hike at the September FOMC meeting rose to 73%.
The U.K. consumer credit report came out Tuesday, showing a decline from . £1.781 billion to £1.423 billion, although approved mortgage applications rose from 63.726 to 63.770 thousand.
GBP/USD Technical Analysis
Major forex indicators favor selling. The Bollinger Band indicator is reversing into a moderate decline. MACD indicator is declining in the negative range and keeps the signal to sell. The oscillator stochastic is flatting at 20% and it may go up.
After breakdown of 1.1647, we open short positions with a target at 1.1531. A stop-loss is taken out at 1.1700.
Upon breakdown and holding the price above 1.1759, we open buy positions with Take Profit at 1.1854. Protective stop-loss is set at 1.1700.