GBPUSD Slips On Renewed US Dollar Demand

Fundamental Analysis

* Flight To Safety: The GBPUSD pair continues its decline in early Asian trading as the US Dollar (USD) strengthens, driven by increased safe-haven demand amid escalating conflict in the Middle East. On Tuesday evening, Iran launched approximately 200 missiles, including ballistic ones, targeting the Israeli capital, Tel Aviv, in retaliation for the assassination of Hezbollah leader Hassan Nasrallah. The situation remains volatile as Israeli Prime Minister Benjamin Netanyahu vowed retaliation, stating that Iran had “made a grave mistake.” According to The New York Times, Israel is sending additional troops to intensify its ground offensive in Lebanon. With tensions at a peak, the Dollar is expected to maintain support as investors flock to safer assets. Additionally, positive U.S. economic data has bolstered dollar demand, with the ADP Employment Change report for September revealing 143,000 new jobs—surpassing expectations of 120,000 and improving on August’s revised figure of 103,000.

Technical Analysis

* Technical Breakout: GBPUSD was traded lower while currently testing the support level 1.32500. MACD which illustrate bearish momentum signal suggest the pair to likely further extend its losses after it breaks below the level.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the support level 1.30900 after it breach below the level 1.32500. Conversely, a potential reversal is also to be expected and the price could head back towards 1.34050.

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Potential Risks

Looking ahead, investors’ attention will turn to Thursday’s key data releases, including the US ISM Services PMI for September, weekly Initial Jobless Claims, and the final S&P Global Services PMI, which are expected to provide additional direction for the markets.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.