GBP/USD Pares Weekly Deficits, Holding 1.3540

The Pound-to-Dollar exchange rate is on the mend, trading at 1.3547 at the time of posting, having gained more than half a percent during the day. The Pound’s recovery has been significant, as it has recouped more than half of the damages it suffered over the previous three days. Investor confidence in New York increased during the day. On Friday, the major US market indices saw gains.

The Greenback Slipped As Risk-On Market Mood Improved

The S&P 500 gained 1.15 percent, the Dow gained 1.43 percent, and the Nasdaq Composite gained 0.82 percent. However, 10-year US T-bond yields decreased for the second consecutive day, dipping below 1.50 percent. The US Dollar Index (DXY), which compares the greenback’s strength versus six rivals, fell 0.20 percent to 94.07.

A report on the UK manufacturing industry was released during the European day by IHS Markit Research (PMI) – the result of 57.1 above analyst expectations of 56.3. “Industrial development is adversely hampered by the continuous pressure across distribution networks,” said Rob Dobson, Head of HIS Markit, despite the excellent reading.

Across the pond, the Fed’s preferred inflation indicator, the Base Personal Consumption Expenditure Index for August, rose 3.6% year-on-year. Furthermore, the University of Michigan’s Consumer Confidence Index jumped to 72.8 from 71 expected. Despite near-pandemic lows, Americans feel more positive about the present economic situation.

Also, the ISM Manufacturing PMI climbed to 61.1 in September, beating expert expectations of 59.6. Despite continued exceptional challenges and growing preference, production performed successfully for the 16th consecutive month. “Firms and distribution networks struggle to cope to satisfy demand because of labor shortages and high turnover as employees seek greater prospects”- Tim Fiore, ISM Chair. The UK’s economic figures calendar is light coming weeks. On the other note, the US ISM Accounts PMI for September will be issued on Tuesday.

Technical and Fundamental Overview

GBPUSD CHART. Source: Tradingview.com

According to the Relative Strength Index (RSI) on the four-hour chart, the GBP/USD has recovered from oversold circumstances. The duo continues to trade underneath the 50, 100, and 200 Simple Moving Averages, indicating that the negative trend has not abated (SMAs). Bears are in complete command of the situation.

At the daily low of 1.3430, there is a little bit of support. It is succeeded by a trough of 1.34 in 2021, and then by a high of 1.3310. Opposition is located at the daily peak of 1.3480, which is accompanied by 1.3520, which was the swing high on Thursday. The bulls will have to wait for 1.3575 and 1.36 in the next round.

The Pound has been in a whirlwind — a better description than new market money. End-of-quarter movements saved GBP/USD by 100 points, but the returns are already lost. The UK’s fuel scarcity weighed heavily on the Pound Sterling, as did uncertainty over Brexit.

Globally rising energy prices have bolstered the secure greenback. The Fed has indicated it will decrease its bond purchases due to rising inflation, and its preferred inflation indicator is due out on Friday.

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