GBP/USD aims at 1.35 level on price charts – again

Justin Freeman

The British pound came close to reaching the all-important 1.35 level in the foreign exchange markets on Tuesday.

Sterling brushed the 1.3483 point on the price charts at one stage across the day, though it later went back down.

Strategists are positive about its medium-term chances though.

One data release in particular was given serious attention by analysts and traders alike.

The country’s Nationwide House Price Index revealed that house prices were at their highest ever recorded level in August.

A rise of 2% between July and last month was noted, and this was attributed to a wide range of factors.

Demand was suppressed for a significant period of time during the lockdown.

It comes against a backdrop of demand stimulation from the country’s government, especially given that stamp duty is temporarily no longer being charged in many cases.

However, it also reveals that despite the coronavirus pandemic’s economic effects, there is still some potential for growth in the British economy – a development that no doubt fuelled the move towards trading the pound.

Analysts suggest that underlying forces could push the pound back towards the key 1.35 level and encourage it to try that spot again.

However, there are several key events on the economic calendar in the coming days that may well affect both the pound and the greenback.

One is Thursday’s job data releases from the US, which are due out around lunchtime in the GMT timezone.

Continuing jobless claims for the dates around 21st August are due at 12:30pm GMT.

These are set to show a slight dip from 14,535,000 to 14,000,000, which, if it transpires, will send a clear signal that the US labour market at least has the capacity to recover.

Initial jobless claims for last week, meanwhile, are due out at the same time and could well bolster this perception.

They are expected to show a dip over the key psychological barrier of 1m.

They are set to go from 1,006,000 to 950,000.

A services purchasing managers’ index from the US will be out at 2pm GMT on that day.

This is expected to show a change from 58.1 to 57.

However, the attention of GBP/USD traders is likely to be diverted in the same time slot by a key speech in the UK.

Andrew Bailey, who serves as the Governor of the Bank of England, will talk then.

In further British central banking news, Michael Saunders, who sits on the Bank’s Monetary Policy Committee, will speak at some stage over the course of Friday.

There will also be a key purchasing managers’ index out of Britain on Friday.

The release from Markit, which will cover construction in particular, is due out at 8:30am GMT.

It will cover the month of August, and is scheduled to show a change from 58.1 to 58.5.

Justin Freeman

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