GBP/USD forecast, FTSE forecast: Two trades to watch

GBP/USD rises ahead of US GDP

No UK data, focus on USD
US GDP forecast to slow to 2% QoQ annualized
GBPUSD rises towards 1.25

GBP/USD is rising for a second straight day as it grinds higher towards 1.25. There is no high-impacting UK economic data due to be released today, and there are no Bank of England speakers scheduled. As a result, the focus is expected to be on the USD and US GDP data.

The US dollar traded under pressure in recent sessions amid concerns over recession in the US. While US durable goods orders jumped, the underlying trend showed weakness in demand for US-made goods, pointing to a softer manufacturing sector. Earlier in the week USD consumer confidence fell to a nine-month low.

Attention now tends to US GDP data for further clues over a possible slowdown in the world's largest economy expectations are for GDP to rise 2% QoQ annualized, a slowdown from 2.4%. Weak growth could fuel downturn concerns.

The data comes ahead of core PCE inflation figures tomorrow and the FOMC rate decision next week.

Where next for GDPUSD?

GBPUSD has risen off the rising trendline support at 1.24, rising back above the 20 sma. This, combined with the RSI above 50 keeps buyers hopeful of gains. Buyers will look for a rise above 1.2515, yesterday’s high, to attack 1.2545, the 2023 high, signalling a breakout. Above here, 1.26 comes into play.

On the flip side. Sellers could look for a fall below 1.24 yesterday’s low and 1.2385 the weekly low negate the near-term uptrend and open the door to 1.2275 the April low.

FTSE struggles for direction, Barclays jumps

Barclays rises 3% as profits jump 27%
NIM rises to 3.2%
FTSE finds support at 7818

The FTSE is set to open lower with earnings in focus as investors digest the latest figures from Barclays.

The bank posted a 27% rise in profits as rising interest rates offset weakness in the investment banking arm.

Net profits rose to £1.8 billion up from £1.4 billion in the same period in 2022, beating forecasts by around £400 million. Meanwhile, revenue jumped 11% to £7.2 billion, ahead of the £6.8 billion forecast.

UK interest rates at a 15-year high in the UK resulted in a solid rise in net interest margin. At the same time, bad loan reserves are not accelerating as dramatically as feared. Barclays set aside £524 million for bad loans and said that there was a limited deterioration, with impairments still at a historically low level.

With the cost of living crisis ongoing, inflation still in double digits and the BoE set to hike rates further, there is still a potential for bad loan charges to increase further in coming quarters.

The investment banking arm was the weak link, with profits falling. Equity trading profits tumbled 33%, while fixed-income trading rose 9%. Advisory fees were also harder to come by, dropping 7%.

The results come as jitters surrounding the banking sector remain, particularly stateside, where regional banks are showing heavy deposit outflows.

Looking ahead, there is no high impacting UK economic data US earnings and GDP data could drive sentiment.

Where next for the FTSE100?

The FTSE has been trending lower across the week but closed off the low yesterday, and the doji candle today highlight the indecision.

Sellers will look for a fall below 7818 to create a lower low and expose the 20 sma at 7795 and 7700 the late January low, and the 100 sma.

On the flipside, buyers could be encouraged by the 20 sma rising above the 50 sma and the RSI above 50. A break above the falling trendline at 7860 could signal a breakout and brings 7940 the April high.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.