Since late September last year, GBP/USD has exhibited a bullish trend, which began when the Bank of England intervened to prevent a further decline in
Since late September last year, GBP/USD has exhibited a bullish trend, which began when the Bank of England intervened to prevent a further decline in the value of the British pound which accelerated dramatically back then. Meanwhile, the US dollar has experienced bearish momentum since then. As a result, the GBP/USD pair has made significant gains, rising approximately 25 cents from its lowest point and reaching a high of 1.285 last month, where it has formed a decent resistance, although it seems like this time the resistance will be broken.
We saw a retreat to the 20 SMA (gray) in the last two weeks of June as the USD regained some momentum on mixed economic numbers, at a time when we are seeing weak figures all over the world. But the price reversed around 140 pips higher above the previous high of 1.2450, so it was obvious that buyers were still in control.
Friday was particularly a great day for the GBP which started the day with limited action against the USD, following the release of strong ISM services and ADP employment data the day before. Initially, the USD gained favor as the FED’s hawkish stance was reinforced. However, this momentum eventually faded, possibly due to the lack of a historical positive correlation between ADP and non-farm payroll (NFP) figures, which proved to be true once again.
The economic numbers from the UK are not looking great either, instead, they’re worse than in the US and with inflation still remaining high, the situation points to a toxic scenario. Housing price data from the UK declined once again, reflecting concerns about economic growth in the current high interest rate environment.
This has raised questions about the possibility of stagflation, a combination of stagnant economic growth and rising inflation. So far, the markets have largely disregarded this data, but the USD side has been driving most pairs this year and the NFP release sent the price to the resistance again, closing just below 1.2850. This sort of price action points to a break this time, after such a strong bullish candlestick on Friday, so GBP/USD is heading for 1.30 now. We are bullish on this pair for the time being, although we will reevaluate accordingg to the data.
GBP/USD
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