- GBPUSD under pressure after three days of gains
- USDCHF edging higher as CHF weakness on pandemic fallout concerns
- Oil prices retreat after three days of gains as demand concerns escalate
- Bitcoin and Ethereum rally has stalled after pull back from key levels
The GBPUSD three-day run-up to one-week highs of 1.3760 is experiencing some strong resistance. The upward momentum is showing some signs of exhaustion as focus shifts to the Jackson Hole Symposium event on Friday. Additional Brexit woes compounded by COVID-19 also continue to weigh heavily on the British pound.
GBPUSD under pressure
The 1.3760 has emerged as a critical resistance level standing in the way of the cable powering to two-week highs.
The cable is highly expected to trade sideways as the market waits to see the outcome of the Jackson Hole symposium. The 1.3695 and 1.3760 would be an area of focus as part of the consolidation wave.
The GBPUSD is currently trading in the slippery ground as dollar strength comes into play despite the recent slide to one-week lows. The Federal Reserve Chair, Jerome Powell, is expected to give a keynote speech on Friday likely to provide hints on the next course of monetary stimulus. The speech could sway sentiments on the greenback consequently influence GBPUSD direction of trade.
Growing cases of COVID-19 in the aftermath of the Latitude festival is another headwind that continues to take a toll on the sterling after the recent spike. So far, more than 1,000 cases have been linked to the festival. Additionally, there are growing concerns that the post-Brexit supply chain crisis could affect Christmas festivities.
USDCHF rally resumes
USDCHF bounces back from one-week lows, on the other hand, continues to gather momentum amid greenback strength and weakness on the Swiss francs. US Treasury yields edging higher to 1.34% continues to offer support to the greenback, consequently sending USDCHF higher.
After bottoming out from one-week lows of 0.9108 USDCHF has powered and found support above the 0.9140 level. A rally followed by a close above the 0.9150 level should pave the way for the pair to power to one-week highs above 0.9180.
Supporting further upside action on the USDCHF is growing concerns about the Swiss economy in the face of the pandemic. The export-reliant economy is at risk of major contraction on the resurgence of the pandemic in the US and China.
Oil prices rally stalls
In the commodity markets, oil prices were struggling for direction on Thursday after three days of price gains. Brent crude fell 0.5% on Thursday as US oil fell 0.7%. Oil prices had been on an impressive run, having emerged that US inventories fell last week for a third consecutive week.
The demand picture is not entirely bullish. Distillate stockpiles have been on the rise, increasing by 0.6 million barrels last week to 138.46 million. Additionally, a return of Mexico oil also continues to put pressure on prices. However, the growing concerns about the delta variant on demand continue to weigh on oil prices.
US indices rally persists
In the equity markets, US stock indices extended their rally, with the S&P 500 and the NASDAQ registering fifth straight days of gains. The rally comes amid a lack of negative catalysts to sour risk sentiments as investors continue to bet on the recovery of the US economy amid the pandemic.
On Wednesday, the Dow rose 0.2% to close at record highs of 4,496 as Tech-heavy NASDAQ gained 0.1% to record highs of 15,041. The Dow Jones also finished on the green, gaining 0.1% to 35,405.
Positive news on vaccination approvals and growing expectations that the Federal Reserve will not shock the markets continue to fuel a buying spree sending indices higher. A spike in Treasury yields also continues to fuel activities in the rate-sensitive financial sectors.
Cryptos pull back
In the cryptocurrency market, BTCUSD’s upward momentum is losing some steam. The flagship cryptocurrency has since tanked below $48,000 after rejection above $50,000.
A build-up in bearish momentum leaves the pair susceptible to further losses to the $44,000 level, the next substantial support level.
Ethereum is also under pressure retreating from four-month highs of $3,370 to lows of $3,100. Immediate support on the emerging pullback is at the $3,000 level.
