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Sterling dove on the catalyst of weak UK data

Market Analysis
2017-07-07_13-02-13

GBPCAD, H1 & H4

Sterling took a dive on the catalyst of weak UK data, with production, trade and house price numbers all undershooting expectations today. The pound is presently showing a 0.4% decline versus the dollar and a 0.3% loss against the euro. Cable logged a two-day low at 1.2913 and EURGBP saw a nine-day peak at 0.8843. The 0.2% m/m decline in industrial output for June made it the fourth consecutive month that industrial production numbers have come in below median forecasts. Data also showed the total trade deficit spiking to GBP 3.1 bln versus the median expectation for a GBP 2.5 bln deficit, while the June Halifax house price gauge showed a 1.0% m/m contraction. The data follows an unexpected deceleration in PMI survey evidence for June, and altogether the numbers compound concerns that the economy is heading into stagnation. More risk expected  for a more sustained drop in Cable should the U.S. jobs report today meet forecast for a 179k rise and a dip in the jobless rate to 4.3%.

A entry was taken in GBPCAD pair, at 1.6740, after the break of 50-period and 20-period moving avreage in the 4hoir chart.  Intraday Target has been set at the round level, i.e.1.6700, while a Daily Target has been set at 23.6 Fibonacci Level, which is 1.6610.  Support is at 1.6850.

Parabolic SAR remains negative in the Daily chart, while RSI is at 38 sloping further down.

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Andria Pichidi

Market Analyst

HotForex

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