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The GBP/USD exchange rate's September decline remains intact and analysts and technical forecaster Richard Perry of Hantec Markets says the 1.2650 support area remains a primary objective.
A second day of closing breach of 1.2760 shows that the downside pressure is still present for GBP/USD.
The market may have only closed marginally lower on the session, but the outlook remains corrective.
This is backed up by negatively configured momentum indicators which suggest that near term rallies are a chance to sell now.
The downtrend of the past three weeks falls at 1.2860 today.
We look for pressure towards the next key support area around 1.2650 (old key breakout levels) but any failed move into the area between the old 1.2760 support and the downtrend at 1.2860 looks to be a chance to sell.
How the market responds around the 1.2650 support will determine the next move, as a breach would really turn the market decisively corrective for potentially 1.2480 and 1.2250.
Momentum is really taking hold in this risk off, dollar rally now.
In the last few days there has been a real shift in outlook, with the fears mounting over the implications of COVID second waves in countries across Europe and the US.
Safe haven flows continue and the US dollar is benefitting from that.
The significant dollar negative positioning that has developed over the past few months is driving traders into a short-covering dollar rally now.
The comments of Fed chair Powell have hardly helped to stem the tide either.
Powell noted yesterday that fiscal support for the economy is vital in the battle against the impact of the pandemic.
However, it seems increasingly unlikely that Congress will be able to agree anything this side of the Presidential election in November.
That is not good for risk and helps to further fuel this flood back into the dollar.
UK Chancellor of the Exchequer Sunak (finance minister) is though expected to announce new fiscal measures for the UK today, but it is in the US Congress where markets would really take notice.
Fed chair Powell speaks once more today, this time with Treasury Secretary Mnuchin too. Will Mnuchin signal some much needed fiscal response?
What to Expect Today
There is a European bias to the economic calendar today. With SNB monetary policy first up at 0830BST, there is no change expected to the deposit rate of -0.75%.
Then the German Ifo Business Climate is at 0900BST, with a mild improvement to 93.8 in September (from 92.6 in August), driven by improvements in both expectations and current conditions.
Later in the session the US New Home Sales are at 1500BST and are expected to reduce by around -1.2% to 890,000 in August (from 901,000 in July.
For a final time this week Fed chair Jerome Powell testifies before the Senate Banking Committee at 1500BST along with Treasury
Secretary Steve Mnuchin about the CARES Act.
Once more, any clarity on Fed monetary policy could drive volatility.
There is another Fed speaker today too, with John Williams (centrist) at 1900BST.
We also note that Bank of England Governor Bailey is speaking at 1500BST, with the focus still on the potential for negative rates.