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GBP/USD steadies around the 2024 high with US payroll revisions in focus

• UK PSNB was higher than expected in July at £3.101bn
• US payrolls for April ’23 – March ’24 could be revised lower
• FOMC minutes are due late
• GBP/USD hovers below 1.3050

GBP USD is holding steady after four straight days of gains, taking the price to a fresh 2024 high of 1.3050.

The pound is unmoved by UK public sector net borrowing figures. The data showed that the government borrowed more unexpectedly in July, highlighting the challenging financial backdrop for the new chancellor of the exchequer, Rachel Reeves, ahead of her first annual budget in the autumn.

British public sector net borrowing was £3.101 billion in July, its largest total since 2021 when the deficit surged during the pandemic. Expectations had been for around £1.5 billion for public sector net borrowing, excluding state-controlled banks.

Delving deeper into the figures, the Office of National Statistics noted rising social benefits boosted by higher inflation and rising government wages as drivers of increased spending.

Meanwhile, the U.S. dollar trades at a 2024 low versus its major peers amid expectations that the Federal Reserve will start cutting interest rates in September.

Today, the focus will be on US payroll revisions, which, according to Goldman Sachs, could show anything between 600k and 1 million fewer jobs were created from April ‘23 to March ‘24. Should this be the case, it would point to a weaker labor market, potentially raising expectations of a deeper or more aggressive rate-cutting cycle from the Federal Reserve, which would weigh on the dollar.

In addition to payroll revisions, the minutes of the August FOMC meeting will be released, which could shed more light on the likelihood of Fed rate cuts in September.

Markets are currently fully pricing in a 25 basis point rate cut and see a 25% probability of and a 50 basis point rate cut.

Looking ahead, Federal Reserve chair Jerome Powell will speak at the Jackson Hole economic symposium on Friday, where he could signal to a September rate cut..
 

GBP/USD Forecast – technical analysis

GBP/USD trades within an ascending channel dating back to late April. The price recently rebounded from 1.2665, the 200 SMA and lower band of the channel, rising above 1.30 to a fresh 2024 high of 1.3050.

Buyers, supported by the RSI above 50, will look to extend gains towards a 1.31 round number and 1.3140, the July’23 high.

Support can be seen at 1.30, the psychological level, and 1.2890, the March high. A break below 1.28 would negate the near-term uptrend.

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Oil steadies after 4-days of losses, EIA inventories in focus

• API oil inventories rise
• Progress toward a Gaza ceasefire lowers the risk premium
• Oil tests support at 72.50

Oil prices are holding steady after three straight days of declines. I meant this is a sign of rising US crude and ventures and on expectations that tensions in the Middle East are easing.

US Secretary of State Antony Blinken concluded a trip to the Middle East intended to help broker a ceasefire agreement in Gaza. Progress towards a bridging proposal that could narrow the gap between the two sides has raised hopes that a deal could be reached sooner rather than later.

Optimism of a ceasefire is reducing the risk premium on oil, sending the price lower in recent sessions.

Meanwhile, concerns surrounding weaker Chinese demand have also dragged on oil prices amid ongoing economic woes, and refinery margins have come under pressure.

According to API figures, US crude oil stocks rose by 347,000 barrels in the previous week. However, gasoline and distillate stocks fell by 1.043 million and 2.25 million barrels, respectively.

EIA stockpile data is due later today.
 

Oil forecast – technical analysis

Oil ran into resistance at 80.00, the 100 SMA and psychological level, correcting lower, below the 200 SMA and support at 77.00. This, combined with the RSI below 50, keeps sellers optimistic of further losses.

Sellers will need to break below support at 72.50, the weekly low, and the June low. Below here, support is at 71.70, the August low, and 69.30, the 2024 low.

On the upside, buyers would need to retake 77.00 and the 200 SMA at 78.00 to stage a recovery towards 80.00.

(Click on image to enlarge)

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