According to data released by the US-based Conference Board (CB), the Consumer Confidence Index for the month of October fell to 125.9. This was a drop from the September figure of 126.3 (revised upwards from 125.1), and was lower than the market expectation of 128.2.
In the CB press release as reported by Reuters, the Consumer Expectations Index component came in at 94.9 in October as against the revised September figure of 96.8 (previous 95.8). Consumers also generally believed it was harder to secure work in October (11.8 in Jobs Hard-to-get Index) than in the previous month (11.0).
The worse-than-expected consumer confidence could be a booster for the British Pound in its pairing with the US Dollar, as we have a situation where diverging economic indicators are at work.
Don’t miss a beat! Follow us on Telegram and Twitter.
Technical Outlook for GBPUSD
GBPUSD is trading just around 1.2873 as at the time of writing, contained within a bullish flag formation. While the USD looks likely to be shaken up by the poor consumer confidence data, the GBP is benefitting from a slew of positive Brexit headlines this Tuesday. Earlier on, the newswires were awash with news that the UK opposition Labour Party under its leader Jeremy Corbyn has given its assent to December elections, which were being spearheaded by UK PM Boris Johnson.
As the prospect of a snap election in December gains momentum, the GBPUSD could see a bullish break from the flag formation, which could in the near-term, take it above the 1.2954 multi-month highs.
A break of the bullish flag and the 1.2954 multi-month resistance high could take the GBPUSD all the way to 1.3173 (March 7 and May 3 highs).
However, the pair has to contend with the FOMC rate decision tomorrow. If the Fed’s decision and statement supports the USD and overrides Brexit-related optimism, this could send the GBPUSD lower to 1.2748, 1.2587 (May 30 lows and September 20 highs). Further support also lies at 1.2502.Download our latest quarterly market outlook for our longer-term trade ideas.
Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.