GBPUSD Countertrend Play (Aug 01, 2017)

Price is making its way to the top of the channel and could be due for a bounce off the 1.3300 major psychological mark. Stochastic is nearing the overbought zone and turning lower could draw sellers back in. 

However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. Also, the 100 SMA lines up with the bottom of the channel, adding to its strength as support if price pulls back. 

UK net lending to individuals data turned out stronger than expected at 5.6 billion GBP versus the projected fall to 4.9 billion GBP. Mortgage approvals came in line with expectations at 65K. Next up, the UK will print its Nationwide HPI and manufacturing PMI, which is projected to tick back up from 54.3 to 54.4. 

The US dollar is being dragged lower by tensions with North Korea and inside the White House itself. The hermit nation recently conducted a successful ICBM test that could potentially hit most of the United States, according to a couple of intelligence officials. Meanwhile, Trump just fired his communications director Scaramucci after 10 days in office. Chicago PMI also turned out weaker than expected with a steep fall to 58.9.

US core PCE price index and personal spending and income data are due next. Analysts are expecting the inflation figure to hold steady at 0.1% while personal spending might also show a meager 0.1% uptick. Personal income could post another 0.4% gain. 

By Kate Curtis from Trader's Way