Recession fears return ahead of Powell

GBP/USD => The pair falls to 1.2250

Gold => The commodity falls to 1825

Nikkei => The index falls to 26250

GBP/USD falls ahead of inflation data, Powell testimony

GBP/USD rose 0.2% in the previous session on the back of USD weakness and after hawkish comments from BoE’s Catherine Mann.

Policymaker Mann supported the idea of a 50-basis point rate hike in order to halt additional inflation from a weaker pound. Her thoughts were in line with Chief Economist Hew Pill earlier in the week, who said that the central bank would risk recession to lower inflation.

Today the pair is falling as the USD rises ahead of Federal Reserve Chair Powell’s testimony before Congress on monetary policy. UK inflation data is also in focus with analysts expecting another record reading, as the cost-of-living crisis ramps up.

UK CPI YoY May Expected: 9.1% (0.1%) Previous: 9.0%

Where next for GBP/USD price?

GBP/USD has been trending lower since June, trading below its 20 and 50 sma and its falling trendline.

The price ran into resistance at 1.1935 before attempting a push higher. The move higher ran out of steam and the pair is now consolidating capped on the upside by 1.240 the weekly high and 1.2170 Friday’s low. The RSI is bearish suggesting that there is more downside to come.

Sellers need to break below 1.2170 to extend the bearish trend towards 1.20 and 1.1935 to create a lower low. Buyers will look for a move over 1.24 to create a higher high and target the falling trendline resistance at 1.25.


Gold trades a weekly low

Gold is falling for a fourth straight session extending losses of 0.3% yesterday even though the USD also fell.

The improved risk sentiment pulled the USD lower, but Gold was still unable to capitalize on the weaker buck. The narrative of higher interest rates and the prospect of more hawkish central banks across the globe have dragged on demand for the non-yielding precious metal.

Attention now is firmly on the fed Powel as he testifies before Congress, the precious metal trades at a weekly low ahead of his performance. Any hints of another 75-basis point hike in July could pull Gold lower back towards 1810.


Nikkei falls despite dovish BoJ

The Japanese index, the Nikkei fell sharply last week, as stocks across the globe tumbled on recession fears.

This week the index has seen a strong start, rebounding off a key support and 5-week low of 25540 and attempting to build momentum towards the 50 sma. It closed 1.8% higher on Monday. The minutes from Friday’s BoJ meeting released overnight showed a dovish stance after the BoJ not only agreed to control the yield curve and continue with daily bond-buying but also said that they will do whatever further accommodative moves were considered necessary. The yen fell to a 24-year low. The Nikkei is trading lower today along with Asian peers as global recession fears flare-up.

Support can be found at 26000 (April 27 low) and 25540 (weekly low).

Resistance for the pair can be seen at 26850 last (50 sma) and 27100 (20 sma)


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