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Aug 30 - 09:55 PM

GBP/USD - COMMENT-Month-End Sterling Bounce Would Provide An Opportunity

By Andrew M Spencer  —  Aug 30 - 08:55 PM

Sterling is often volatile on month-end rebalancing flows; a bounce Wednesday could provide an opportunity to sell.
has fallen 4.3% and EUR/GBP 2.4% in August - the charts and fundamentals point to further losses in September nL8N3051ZW.

Britain's next prime minister, to be announced on Sept 5, faces a raft of challenges, with UK public finances already strained.

Dealing with the cost-of-living crisis amid surging energy prices and inflation, will be the domestic focus initially as UK voters expect a package to assist the lower-paid.

How this package is received, along with efforts to improve health and social care, will be crucial to containing further industrial unrest, with a string of strikes currently planned nS8N2Y1087.

The conflict in Ukraine shows no signs of a resolution nL1N305270, maintaining pressure on energy prices and the costs of continued UK support.

Relations with the European Union are likely to deteriorate as both candidates for PM wish to rewrite the Northern Ireland protocol, which could trigger trade barriers with the UK's largest market nL8N2ZT3M8.

0#BOEWATCHprices a half-point rate hike on Sept 15 at 70.76%, while FEDWATCH prices a 75 basis-point hike at 68.5%, which should keep sterling pressured.

Technically, daily momentum studies and Bollinger bands head lower, while five, 10 and 21 daily, weekly and monthly moving averages fall, which is a bearish trending setup looking for a test of the 1.1413 2020 base.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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