GBP/USD is sliding toward 1.38 amid dollar strength. A break below critical support at 1.3785 is inevitable as King Dollar seems unstoppable, according to FXStreet’s Analyst Yohay Elam.
US retail sales data and Fed Chair Powell's speech are critical to the next moves
“Britain's jobs report showed an impressive 8.8% increase in average earnings. Pound bulls were likely impressed by the UK's low Unemployment Rate of 4.7% in June, but less delighted with the meager decrease in jobless claims in July. Moreover, GBP/USD's support from Britain's economic data – and the potential resulting hawkishness by the Bank of England – is likely no match to the dollar.”
“The hawks are gaining ground. Federal Reserve Chair Jerome Powell could alleviate them in a speech late in the day, as he has tended to lean toward the dovish side. However, if he fails to deny that the Fed is set to purchase fewer bonds – print fewer dollars – the greenback could extend its gains.”
“Markets will be watching US Retail Sales figures closely. The economic calendar is pointing to a decrease in headline sales and a minor increase in the all-important Control Group core measure. Any figure that is only satisfactory could give the greenback another boost.”
“Critical support awaits at 1.3785, which is August's trough and the lowest since July 27 – three weeks ago. Further down, 1.3760 and 1.3720 await.”
“Some resistance is at 1.3835, where the 200 SMA hits the price. It is followed by 1.3880, 1.3895 and 1.3950.”