GBP/USD Price Forecast – Downward Trendline to Drive Selling Under $1.3000? - Forex News by FX Leaders
GBP/USD Price Forecast - Downward Trendline to Drive Selling Under $1.3000?

GBP/USD Price Forecast – Downward Trendline to Drive Selling Under $1.3000?

Posted Friday, April 22, 2022 by
Skerdian Meta • 2 min read

Although GBP/USD has struggled to build on Wednesday’s gains, the pair’s bullish bias remains in the short term, with the pair trading above the key 1.3050 level. The pound’s next recovery target is at 1.3100. The strong selling pressure surrounding the US dollar prompted a decisive rebound in the GBP/USD on Wednesday. The dollar remains under pressure early Thursday, but the sharp rise in EUR/GBP suggests that the euro is the main beneficiary of capital outflows from the dollar.

The US Dollar Index was down 0.45 percent on the day as of press time, while the EUR/GBP was trading at its highest level in a week, up 0.7 percent. Several European Central Bank (ECB) policymakers have recently adopted a hawkish tone, pointing to July as a possible timing for the first ECB rate hike, triggering a broad-based euro rally.

Bank of England Governor Andrew Bailey and FOMC Chairman Jerome Powell will deliver speeches in the afternoon. It’s worth noting that the Fed’s aggressive policy tightening stance has already been priced in, with the CME Group FedWatch Tool indicating a 2.2 percent chance of the Fed raising the policy rate by less than 100 basis points in the next two meetings. As a result, a hawkish tone from Bailey could help the pound gain ground against the dollar.

GBP/USD

Meanwhile, the weekly Initial Jobless Claims and the Philadelphia Fed’s Manufacturing Survey will be on the US economic calendar on Thursday. However, a significant market reaction to these data would be surprising.

GBP/USD Technical Outlook

GBP/USD remains bounded in consolidation from 1.2971, with an intraday bias of neutral first. With the 1.3165 resistance intact, further decline is expected. On the downside, a break will resume the larger downtrend that began with 1.4248. The following target is a 61.8 percent projection of 1.3641 to 1.2999 from 1.3297 at 1.2900. On the upside, a strong break of 1.3165 will confirm a short-term bottom and shift the bias back to the upside for the 1.3297 resistance and beyond.

In the grand scheme of things, the rise from 1.1409 (2020 low) has ended at 1.4248. The drop from 1.4248 could still be a corrective move, or it could signal the beginning of a long-term downtrend. In either case, the price would fall further to the 61.8 percent retracement of 2.1161 to 1.1409 at 1.2493. A break of the 1.3748 resistance level is required to confirm the end of the fall from 1.4248, or the outlook will remain bearish. Good luck!

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
Comments
0 0 vote
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments