GBP/USD – All about confidence today

on Jul 30, 2013
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**iNVEZZ.com, Tuesday 30 July:** Since hitting the 61.8 percent Fibonacci retracement level on 25 July the pound has been trading marginally lower against the greenback. Analysts from Bank of America Merrill Lynch and BNP Paribas favour the short side as they see further quantitative easing from the Bank of England, whereas the US Federal Reserve is thinking of reducing its asset purchases, the so called ‘’taper’’.

Sterling seasonality also favours the longer term downtrend, yet historically the perfect timing for shorting the pound has been around the beginning of August.
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The market is awaiting the US Consumer Confidence for July, due out at 15.00 BST. The index is a leading economic indicator of public sentiment for the economy and vicariously for the US dollar, affording insights for traders as to where the US dollar index is likely heading. Analysts are expecting a slight decrease from the prior period’s 81.4 to 81 this month, reflecting rising oil prices and mortgage rates.

UK GFK Consumer Confidence for July is due out at 00.01 BST tomorrow. The consensus is for improvement to -19 from -21 in June. UK consumer confidence is not as correlated to the pound as is the case with the US index and the dollar.
Nevertheless, as George Soros puts it with his theory of reflexivity, the expectations of market participants have the power to influence the markets.

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