Bearish Reversing Pattern in GBPUSD! UK Hose Prices Down.

GBPUSD faces significant resistance at the 100-week SMA after another rejection last week. Weak UK economic data, coupled with a hawkish Fed, helped reverse the pair which is showing now a bearish outlook. However, sellers will have to push the price below 1.25 for the bearish reversal to materialize.

UK Rightmove House Price Index

The GBP/USD pair has shown a strong upward trend over the past two months, reflecting relative strength in the British pound compared to the US dollar. However, recent developments have influenced its trajectory. GBP/USD experienced a sharp spike of over 100 pips following weaker-than-expected US Consumer Price Index (CPI) data, reaching levels around 1.2860.

This move indicated initial market optimism but was reversed after the Federal Reserve maintained its stance on interest rates, signaling no immediate rate cuts. Earlier in the week, GBP/USD maintained its positive momentum. However, on Wednesday, poor economic data from the UK across various sectors dampened sentiment, contributing to the pair’s volatility and retracement.

GBP/USD Chart Weekly – The 100 SMA Stood the GroundChart GBPUSD, W1, 2024.06.16 19:34 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

GBP/USD encountered significant resistance near the 100-week Simple Moving Average (SMA) around the 1.2860 level. This resistance led to a decline below 1.27, exacerbated by the outcome of the FOMC meeting, which did not suggest imminent rate cuts. If GBP/USD confirms a bearish reversal from current levels, the price could target lower support levels. The weekly chart indicates a possible downside towards 1.23 if bearish momentum continues and if key support levels are breached.

Key Events for GBP/USD Last Week:

  • FOMC Meeting: The Federal Open Market Committee (FOMC) meeting last week did not hint at rate cuts, reinforcing a stronger USD and contributing to the GBP/USD decline.
  • UK Economic Data: Early in the week, a series of weak UK economic data indicated declining activity across most sectors, adding downward pressure on GBP/USD.
  • US CPI Inflation: The release of lackluster US CPI inflation data initially spiked GBP/USD more than 100 pips to the 1.2860s. However, the Fed’s stance of maintaining higher interest rates for longer led to a reversal from those highs.

Key Events for GBP/USD This Week:

  • UK CPI Inflation: Headline CPI YoY is expected to fall from 2.3% to 2.0%, Core CPI YoY is expected to fall from 3.9% to 3.5%
  • Bank of England Meeting: No rate cut expected but they might signal one
  • US Retail Sales: Headline ales expected to grow by 0.3% while core sales by 0.2%
  • US, UK Manufacturing and Services PMI: Both sectors are in expansion in both countries and are expected to remain stable

UK Rightmove House Price Index

  • House Price Index:
    • June: 0.0% (flat)
    • May: +0.8%
    • House prices remained unchanged in June compared to a 0.8% increase in May, indicating a stabilization in house prices after the previous month’s rise.
  • New Sellers:
    • New sellers coming to market increased by 6%
    • The increase in new sellers suggests that more homeowners are deciding to list their properties, potentially due to perceived favorable market conditions or other personal reasons.
  • Buyer Enquiries:
    • Buyer enquiries to agents rose by 5%
    • The rise in buyer enquiries indicates growing interest and demand from potential buyers, which is a positive sign for market activity and could lead to increased transactions in the coming months.

GBP/USD Live Chart

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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