Risk on ahead of US inflation data later in the week
EUR/GBP => The pair rises towards 0.87
BTC/USD => The cryptocurrency rises towards 22k
S&P500 => The index rises holds over 4050
EUR/GBP looks to UK GDP data
EUR/GBP rose 0.2% across the previous week, rising to an almost three-month high, over 0.87, before ending the week at 0.8670. The pound picked up off the lows after the newly elected British Prime Minister Liz Truss announced a massive energy relief package, capping household energy bills as of next month. However, the UK bond market showed some concerns over the huge government borrowing required to fund the package. Meanwhile, the euro came under pressure as Russia cur gas flows along the Nord Stream 1 gas pipeline. However, a record 75 basis point rate hike helped the euro higher. As the new week begins, the pair is edging higher as demand for the euro surges. Attention is on UK GDP data which is forecast to show a recovery in economic growth in July after contracting in June. Strong than expected growth could help raise bets of a larger rate hike from the BoE next week.
|UK GDP MoM July||Expected: 0.5% (1%)||Previous: -0.5%|
Where next for EUR/GBP?
EUR/GBP has been pushing higher, heading towards the 2022 high of 0.8720. The bullish RSI and the 50 sma crossing above the 100 sma keep buyers hopeful of further gains. A break above 0.87209 is needed to bring 0.88, the February 2021 high, into focus. On the flip side, sellers could look for a move below 0.8568 to create a lower low and bring 0.8515, the 100 sma, and horizontal support into play.
BTC/USD holds 10% gains from Friday, 23k next?
Bitcoin’s 10% rally on Friday, which saw the price retake 21k, was the cryptocurrency’s best one-day performance in 6 months and took the industry’s market cap back over $1 trillion. Improved market sentiment, a weaker USD, and bargain hunters out in force amid the realisation that digital assets were looking undervalued all helped lift BTC/USD and helped hold those gains across the weekend. News of FTX Ventures acquiring a 30% stake in Sky Bridge Capital could have added to the bullish sentiment. After a strong rally, we are likely to see consolidation here. Should BTC/USD hold above 20,700k then we could see this rally run to 23k. Bitcoin traders will be looking to US inflation data as the next catalyst for further clues on what the Fed could do next week. Attention will also be on the Merge as a potential source of volatility across ETH/USD and BTC/USD. It’s worth noting that creditor reimbursements from Mt Gox are expected to begin this week giving traders plenty to be digesting this week.
S&P500 awaits inflation data
US stocks climbed last week, snapping a three-week losing run, rising off multi-week lows as risk appetite improved. The market shrugged off comments from Federal Reserve Chair Jerome Powell, who reaffirmed the Fed’s hawkish position, pledging to keep going until the job is done. Instead, declining treasury yields and hopes of falling inflation helped the market mood. Today indices are heading higher. There is no high-impacting US economic data releases today. Looking out across the week, US inflation data will be the key focus and could raise doubts over the likelihood of a 75 basis point rate hike from the FOMC next week. Inflation is expected to continue falling to 8% YoY in August, after falling to 8.5% in July, from 9.1% in August. Falling inflation could see hawkish rate hike bets ease as the market prices in the passing of peak inflation.
Support can be found at 4000 (psychological number) and 3900 (September low).
Resistance for the pair can be seen at 4100 (February low) and 4190 (June high).