We welcome you to the trading month of August. While markets are usually quieter during this summer month, the first week of August might be different this year as we have big market movers ahead of us. Before the highly anticipated U.S. Nonfarm Payrolls report, due for release on Friday, traders will scrutinize the ISM Manufacturing (Monday) and ISM Non-Manufacturing index (Wednesday).
Apart from these market-moving reports, sterling traders prepare for a volatile week as the Bank of England is expected to cut interest rates and add stimulus to stem a potential fallout from Brexit. Analysts predict an aggressive action from the BoE, which could increase the pressure on the British pound.
The BoE will announce its rate decision alongside the release of its Quarterly Inflation Report on Thursday. While the overall bias remains bearish for the pound, traders should prepare for volatile swings ahead of "Super-Thursday".
The sentiment only changes from bearish to bullish in case of a sustained break above the resistance area at 1.3485/1.35. On the other side however, if sterling is not able to break below 1.30 in order to reinvigorate fresh bearish momentum, we expect the current sideways trend to continue.
The U.S. dollar weakened against its counterparts after the U.S. GDP expanded at less than half the rate economists had forecast. The weak domestic data led to speculation the Federal Reserve may push back a rate increase to 2017. The focus therefore shifts to the U.S. labor market report this week and it would need an ambiguous strong report to help the dollar.
EUR/USD
The euro rallied towards 1.12 on the back of dollar weakness and broke above a secondary downward channel while it is now facing the higher resistance line of its primary downward channel at around 1.13. Gains might be limited until that level, whereas the 1.11-level could lend a short-term support to the euro. 
Important economic data for today:
7:55 EUR German Manufacturing PMI
8:30 UK Manufacturing PMI
14:00 USA ISM Manufacturing
(Time zone: UTC)
Here are our daily signal alerts:
EUR/USD
Long at 1.1185 SL 25 TP 30-40
Short at 1.1134 SL 25 TP 30-40
GBP/USD
Long at 1.3290 SL 25 TP 20, 40
Short at 1.3160 SL 25 TP 20, 40
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.