GBP/USD at Decisive Point! Will Sellers Remain in Control?
GBP/USD has been bearish since the start of last week and now is facing the 20 daily SMA as support
GBP/USD has been on a bullish trend since late September last year as highs get higher and so do the lows. This pair has made some massive gains, and last week we saw a really strong bullish move as the price surged around 550 pips higher, surging to 1.3145. But eventually, we saw a reversal at the start of last week, which seems to be continuing this week as well.
On Monday the price formed a doji candlestick which is a bullish reversing signal, but the reversal didn’t come and yesterday we saw another bearish candlestick. The recent data indicate that the UK economy is showing weakness, which indicates that it is beginning to feel the impact of interest rate hikes BoE since the beginning of 2022. This is reflected in the country’s economic output, which recorded its weakest rise so far this year. The business activity remains stagnant and work is also decreasing.
The decrease in inflation which we saw last week was seen as a positive development for the UK economy, although the remarks by S&P Global Market Intelligence, are likely to have a negative impact on this pair further ahead. They expressed concerns that the UK economy was very close to stagnating this month, and when the forward-looking indicators look discouraging too. These factors have reignited worries about the potential of a recession in Britain.
The BoE should have taken notice of yesterday’s data, so markets are pricing in an end to the prolonged rate hike cycle. Although, the USD is the other factor in this dance, so the FED’s forward guidance tomorrow will have a large impact. But considering the developments in the UK, a hawkish FED would have a larger bearish impact on this pair than a dovish FED.
GBP/USD Live Chart
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