GBPUSD Outlook: 2024 Highs Meet 2009 Lows

Key Events:

GBPUSD records a fresh 2024 high at 1.3450
UK Flash Manufacturing and Services PMIs decline in August
US Dollar Index retests July 2023 lows
Technical Analysis: GBPUSD

UK Economic Metrics:

UK CPI y/y stabilized at 2.2% in August, close to the BOE’s target
UK GDP m/m recorded 0% growth, signaling concerns over the country’s economic growth trajectory.
UK Claimant Count Change dropped from 2024 highs in August but remains up 0.4% for the year.
UK Flash Manufacturing PMI fell from 52.5 to 51.5, while Services PMI dropped from 53.7 to 52.8, suggesting cooling inflationary pressures.

According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the latest PMI data hints at a potential "soft landing" for the UK economy. With services inflation declining to its lowest point since February 2021, the Bank of England may be more inclined towards further rate cuts before the end of 2024.

Technical Outlook

GBPUSD Outlook: 4H Time Frame – Log Scale

Source: Tradingview

On the 4-hour chart, GBPUSD formed a bullish continuation pattern (inverted head and shoulders) below the 1.3260 high between August and September. The breakout beyond the pattern led the GBPUSD towards the 1.3430 high, supported by a weak US dollar.

Potential pullbacks could see support at levels 1.33, 1.3260, and 1.32.

From the upside:

GBPUSD Outlook: Monthly Time Frame – Log Scale

Source: Tradingview

On the monthly time frame, GBPUSD has broken out above its 15-year consolidation and is now nearing the 2009 lows, which coincide with key Fibonacci retracement levels (0.236 and 0.272) of the downtrend from the 2007 high (2.11) to the 2022 low (1.10), around the 1.34 zone.

Further resistance is expected between the 1.37-1.38 range, followed by the 2021 highs near 1.4250.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.