GBP holds at lower levels post-budget

GBP holds above last week’s lows

The pound is marginally in the black versus the US dollar after UK Chancellor of the Exchequer Hammond delivered a budget outlining increased spending yesterday, declaring that the era of austerity is “finally coming to an end”. Notably, an extra GBP500 million has been allocated for preparations for leaving the EU.

The pound weakened 0.23% versus the dollar yesterday, though failed to take out last week’s low of 1.2775, which will act as interim support this week. Trendline support, which was previously resistance, is also around the 1.2775 level.

 

GBP/USD Daily Chart

Source: OANDA fxTrade

 

USD/CNH marks time below 7.0

USD/CNH looks poised for a seventh monthly gain in a row and is hovering close to 21-month highs. Chinese press suggested earlier today that the yuan is “not likely” to fall below 7.0 to the US dollar. Earlier this month, US commentaries suggested 7.0 was a key level for China and that they might use  FX reserves to prevent a breach. In recent days, a number of Chinese officials have stated that the yuan will remain “stable” while last week Premier Xi reiterated that China would not engage in competitive devaluation.

 

USD/CNH Daily Chart

Source: OANDA fxTrade

 

Europe growth may be revised lower

The second reading for Euro-zone GDP growth is the highlight of an otherwise dull data slate. Forecasts suggest growth will be revised lower to 1.8% from 2.1% on an annualized basis, but remain unchanged at 0.4% quarter-on-quarter. Consumer confidence and other Euro-zone sentiment indices are expected to be marked lower in October amid softer data, Italy budget issues, Brexit and tumbling equity markets.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.