Risk sentiment remains cautious after yesterday’s steep selloff
GBP/USD => The pair rises from the 2022 low
ETH/USD => The cryptocurrency falls to an 18-month low
DAX => The index rises above 13500
GBP/USD rises ahead of UK jobs data
GBP/USD tumbled over 1.1% in the previous session to a 2022 low after UK GDP unexpectedly contracted in April on a monthly basis. A significant reduction in the Test and Trace service, in addition to falling manufacturing, owing to supply chain disruptions, hit the economy. The weak GDP data comes just days before the BoE will announce its interest rate decision. Meanwhile, the USD rose on bets that the Fed could raise interest rates at a faster pace in order to tame inflation. Today the pair is rising as attention turns to the UK jobs data, which is expected to show that unemployment ticked lower and that wages excluding bonuses fell, creating more of a squeeze on households. US wholesale inflation is also under the spotlight and is expected to ease slightly.
| UK GDP MoM April
UK unemployment |
Actual: -0.3% (0.2%)
Expected: 3.6% (0.1%) |
Previous: -0.1%
Previous: 3.7% |
Where next for GBP/USD?
GBP/USD ran into resistance at 1.2665 and fell steeply, dropping through the 20 sma and breaking below the key support at 1.2155, the 2022 low, The RSI is supportive of further downside while it remains out of oversold territory. Sellers need to break below 1.2107, yesterday’s low, in order to extend the bearish trend towards 1.03. Resistance can be seen at 1.2330, the May 18 low, ahead of 1.2410, the April low.
Ethereum selloff continues
ETH/USD crashed 15% yesterday and is down a further 5% today, falling to an 18-month low as cryptocurrency markets collapse across the board. While the crypto market has been under pressure as central banks tighten policy across the globe and risk sentiment falters, the latest selloff appears to be linked to crypto lender Celsius Network halting withdrawals for its 1.7 million customers due to extreme market volatility. Binance, the crypto exchange, even temporarily suspended bitcoin withdrawals. Increased talk of capitulation has kept the likes of ETH/USD out of favour and trades in oversold territory for the first time since mid-January.
DAX awaits German ZEW investor sentiment & inflation data
The DAX tumbled 2.5% yesterday in risk-off trade on inflation fears and worries that central bank tightening will slow economic growth and tip major economies into recession. In the US session, the S&P500 fell into a bear market, and the bond market flashed a warning sign of a recession. Today risk sentiment remains fragile as indices edge higher and as attention turns to German inflation data, which is expected to confirm the record-high preliminary reading. German ZEW economic sentiment is expected to improve in June, although this may change once the ECB starts raising interest rates next month.
| Ger ZEW economic sentiment | Expected: -27.5 (0.1%) | Previous: -34.3 |
Support can be found at 13290 (May low) and 12965 (9 March low).
Resistance for the pair can be seen at 13700 (May 18 low) and 14075 (50 sma)
