GBP/USD Pressured by Weak UK Trade Data – 14 October 2024

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As we head into Monday, October 14, 2024, global markets are positioned for a session that could see heightened volatility, driven by significant economic data releases and ongoing market reactions to previous events. The U.S. dollar remains the focal point as traders assess the impact of the Federal Budget Balance and consumer sentiment data from the previous week, alongside expectations for key inflation data and central bank communications.

In the currency markets, the GBP/USD pair experienced a volatile session, largely influenced by mixed UK trade data and U.S. CPI figures. The pound remains under pressure amid ongoing concerns about the UK’s economic outlook, particularly following disappointing trade balance figures. Meanwhile, traders are closely monitoring the U.S. as inflation expectations and Fed communication set the tone for upcoming movements.

Meanwhile, the USD/CAD pair experienced sharp fluctuations, reflecting the mixed economic sentiment around U.S. inflation data and rising oil prices, which provided support for the Canadian dollar. The movements were also driven by anticipation of the IEA Monthly Report, expected to influence both currencies due to their oil market exposure.

The EUR/USD pair exhibited significant weakness, driven by a series of disappointing Eurozone data releases, especially the dip in German industrial production figures. This allowed the dollar to gain ground, but traders remain cautious as they await further economic reports and the ECB’s outlook on future monetary policy.

GBP/USD

Technicals in Focus

The GBP/USD pair saw notable volatility, trading near the 1.3060 level after oscillating throughout the session. Movements were heavily impacted by weak UK trade balance data and stronger-than-expected U.S. CPI figures. Technically, the pair is struggling to break past the 1.3100 resistance, and a decline below 1.3050 could pave the way for further downside. The MACD indicator remains close to the zero line, indicating indecision, while the Stochastic Oscillator is trending lower, suggesting weakening momentum.

Trading Strategy: Neutral to Sell

Sell below 1.3060-1.3040 with targets at 1.3010-1.2980 and 1.2950-1.2920, with a stop loss above 1.3090. Alternatively, consider long positions above 1.3100 with targets of 1.3140-1.3170, with stops below 1.3050.

USD/CAD

Technicals in Focus

The USD/CAD pair remained volatile, closing near the 1.3760 level after testing support at 1.3740 and resistance near 1.3780. The pair’s movement was largely driven by oil price fluctuations and expectations ahead of the IEA Monthly Report, which could have a significant impact on the Canadian dollar. On the technical side, the MACD shows diminishing bullish momentum, while the Stochastic Oscillator is in neutral territory, indicating potential consolidation in the short term.

Trading Strategy: Neutral to Buy

Buy above 1.3760-1.3740 with targets at 1.3800-1.3830 and 1.3860-1.3890, with a stop loss below 1.3710. Alternatively, consider selling below 1.3720 with targets of 1.3680-1.3650, with stops above 1.3760.

EUR/USD

Technicals in Focus

The EUR/USD pair extended its downtrend, closing near the 1.0920 level, as the euro weakened in response to disappointing industrial production figures from Germany. The pair saw a brief recovery attempt, but the strong U.S. dollar and weakening Eurozone economic indicators kept pressure on the euro. The MACD indicates strong bearish momentum, while the Stochastic Oscillator remains in oversold territory, suggesting that a corrective bounce could be imminent.

Trading Strategy: Neutral to Sell

Sell below 1.0920-1.0900 with targets at 1.0870-1.0840 and 1.0810-1.0780, with a stop loss above 1.0950. Alternatively, consider buying above 1.0950 with targets of 1.0990-1.1020, with stops below 1.0900.

Market Outlook

Looking ahead, traders will closely watch the release of industrial production and claimant count data from the UK, as well as U.S. inflation figures and Fed communication. Oil price movements will also be a key driver for the USD/CAD pair, particularly with the IEA Monthly Report expected to influence energy markets. The overall market sentiment remains cautious as central banks weigh their policy options amidst growing concerns about inflation and slower global growth.

As the new week begins, the market is expected to remain sensitive to economic data and central bank communications, with potential for increased volatility as traders react to new developments.

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