Two trades to watch: GBP/USD, FTSE

GBP/USD looks to build on gains for a second day ahead of US Challenger job cuts, initial jobless claims, factory orders & trade balance this afternoon. FTSE points lower with a slow start expected, all eyes on US data.

Charts (1)

GBP/USD gains ahead of US data 

GBP/USD is attempting to extend gains for a second session. 

The US Dollar is attempting to stabilize after yesterday’s ADP report inspired slide. The ADP employment report came in significantly lower than forecast at 374k vs 613k expected. 

The Pound is being lifted by news of a second covid jab for the most vulnerable. However, it battles Brexit woes amid concerns over what will happen when surrounding the Northern Ireland protocol when the grace period expires on October 1. 

Looking ahead the UK economic calendar is empty so the greenback is likely to drive the pair.  

US jobless claims, trade balance and Challenger cuts are all due. 

Where next for GBPUSD? 

The pair has been trading in an ascending channel since August 20, trading above its 50 sma on the 4-hour chart but below the 200 sma. 

The RSI is in bullish territory and pointing higher, so supportive of further gains. However, any move higher will need to overcome tough resistance around 1.38 round number, 200 sma and trendline resistance dating back to early June. A break above here could bring 13855 the upper band of the rising channel and then 1.3890 horizontal resistance into play. 

On the flipside support can be seen at 1.3740 the 50 sma and lower band of the rising channel. Sellers could gain traction beyond 1.3720 yesterday’s low. 


FTSE pares yesterday’s gains as attention 

FTSE, in line with its European peers is set to see a flat -ish start after gains in the previous session. An upward revision to the manufacturing PMI and rising house prices lifted the index. 

Oil majors could slip slightly as oil prices decline following OPEC+ decision to stock with increasing output over the coming months. 

Melrose and Barratt Development are due to report. 

All eyes will be on US data ahead of tomorrow’s non-farm payroll report which could influence when the Fed will start to taper support. 

Where next for the FTSE? 

The FTSE has trended higher within an ascending channel since August 20. The index failed at 7188 resistance and has been heading lower. The bearish crossover on the MACD combined with the break below the 50 sma on the 4 hour chart is keeping sellers hopeful of further downside. 

Any move lower would need to break the lower band of the rising channel at 7120 in order to head towards 7088 the 200 sma and late August low. A move below here would negate the near-term uptrend. 

On the flip side any recovery would need to clear 7135 the 50 sma in order to head back towards 7199 August 18 high and 7220 the upper band of the channel. 

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