GBP value, information and evaluation:GBP/USD has damaged beneath help from a trendline connecting the upper lows of an upward sloping channel in
GBP value, information and evaluation:
- GBP/USD has damaged beneath help from a trendline connecting the upper lows of an upward sloping channel in place since March 2020.
- That leaves a key query: is that this the beginning of a brand new pattern decrease within the pair or will energy resume as soon as the markets have digested a surprisingly hawkish Federal Reserve.
Begin of a brand new downtrend in GBP/USD?
GBP/USD has dropped to its lowest degree since Could 7, falling beneath 1.40 from a current excessive above 1.42 in what appears to be like to be the tip of the uptrend in place for greater than two years because the weekly chart beneath reveals. This comes within the wake of a surprisingly hawkish Federal Open Market Committee that recommended US rates of interest will rise sooner than beforehand anticipated, with its so-called dot plot pointing to 2 will increase by the tip of 2023.
GBP/USD Worth Chart, Weekly Timeframe (February 3, 2020 – June 17, 2021)
Supply: IG (You’ll be able to click on on it for a bigger picture)
That leaves open one key query for GBP/USD merchants: has the uptrend now ended and does this mark the beginning of a brand new pattern decrease, or will the worth now stabilize earlier than resuming its advance? A lot will rely on whether or not Federal Reserve Chair Jay Powell and his colleagues push again towards the hawkish message from the dot plot, or whether or not greater inflation knowledge within the months forward will reinforce the view that charges must rise, with greater inflation now not seen as transitory.
GBP/USD Worth Chart, Day by day Timeframe (March 26 – June 17, 2021)
Supply: IG (You’ll be able to click on on it for a bigger picture
As ever, the break will have to be sustained earlier than a brand new pattern decrease is confirmed however, with the US Greenback recording its strongest day in 15 months after the Fed assertion, EUR/USD recording its sharpest fall since November 2020 and USD/JPY testing its 2021 excessive, the outlook is ominous for GBP/USD bulls.
Be aware too that the standard Summer time lull is approaching, doubtlessly lowering volumes and resulting in uneven buying and selling within the markets total, reinforcing the necessity for tight stops when buying and selling.
— Written by Martin Essex, Analyst
Be at liberty to contact me on Twitter @MartinSEssex
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