Trading Insights: BOE rate decision puts GBPUSD in focus

The above chart (1) illustrates the potential bearish conditions of the British Pound vs the US dollar (GBP/USD) as observed on the weekly chart.

Market Talk:

The buck (USD) seems to be attracting buyer interest?

FX land does not seem to care at all about Fitch

Fitch the international credit rating agency downgraded the US credit rating… And the USD strengthens.

The US dollar index up +1% last five days

What is the US dollar index?

The US Dollar Index is composed of six major currencies, with their respective weights in the index:

• Euro (EUR) - 57.6% weight - EUR/USD
• Japanese yen (JPY) - 13.6% weight - USD/JPY
• British pound sterling (GBP) - 11.9% weight - GBP/USD
• Canadian dollar (CAD) - 9.1% weight - USD/CAD
• Swedish krona (SEK) - 4.2% weight - USD/SEK
• Swiss franc (CHF) - 3.6% weight - USD/CHF

Although the US Dollar index itself can be traded, the US Dollar Index is mostly used by traders, investors, and analysts as a benchmark to assess the dollar's strength relative to other currencies. It is also seen as an indicator of the US economy's health.

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Today’s economic calendar

UK Bank of England (BOE) rate decision on deck

• The market in general expects at least a 0.25% rate hike
• Higher UK wage growth points to the prospects of higher UK inflation down the road
• Although some analysts may have the view that the BOE could justify hiking more than 0.25%, chances are we’re looking at a 0.25% hike, but the BOE could signal that the door will remain open for further rate hikes in the coming months

Source: TradingView / J. Knobel August 3 2023 7:49 AM UTC

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Trading prospective:

FTSE 100 Index - bearish below its 200 day moving average

Technical commentary: Uk FTSE 100 current price 7,443 outlook looking bearish since price fell below its 200 day moving average. Downside prospects for a test of the lower 7,230s (see chart) can not be ruled out. Upside risk above the 7,740s resistance that intersects at the multi-month downward sloping trendline (see chart) could suggest a bull market trigger event. Therefore, short positions could be technically supported provided price remains below the 7,740 key resistance.

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