As per the last market session's analysis, the GBP/USD has confirmed its bearish momentum following the recent CPI data release. With the CPI numbers coming out lower than expected, indicating subdued inflation, the market is bracing for an accelerated rate hike timeline. This has resulted in pronounced USD strength against the British Pound.
Bank of England Governor Bailey (who will also today give a speech) on Monday noted signs of economic recovery, emphasizing that the bank's forecasts point to a "somewhat stronger growth story." Tuesday's news determines the medium-term prospects for the market, and most likely the decline will continue. The whole forex market is in the red corridor because of a rising Dollar index.
Technical analysis: The GBP/USD is currently exhibiting a strong bearish trend, evidenced by the sharp decline through the previous support level at 1.26100. The pair has retested this level, which has transformed into a resistance zone. The bearish rejection at this key level signals continued control by sellers. The next support it broke was the 1.2575 level, which the price has broken and closed below. A break below this support could open the path towards lower levels, around 1.2520 / 1.2500.
Our position: With the Bank of England’s hint at imminent rate cuts, we maintain a bearish outlook on the Pound. The strategy is to seek short positions on confirmations of resistance rejections, particularly around the 1.25800 zone as a retest and 1.2650. Traders should keep a close eye on further economic releases. Until a significant shift in economic data or monetary policy occurs, the preference is to capitalize on the current downtrend, targeting lower supports for potential profit-taking.
Bank of England Governor Bailey (who will also today give a speech) on Monday noted signs of economic recovery, emphasizing that the bank's forecasts point to a "somewhat stronger growth story." Tuesday's news determines the medium-term prospects for the market, and most likely the decline will continue. The whole forex market is in the red corridor because of a rising Dollar index.
Technical analysis: The GBP/USD is currently exhibiting a strong bearish trend, evidenced by the sharp decline through the previous support level at 1.26100. The pair has retested this level, which has transformed into a resistance zone. The bearish rejection at this key level signals continued control by sellers. The next support it broke was the 1.2575 level, which the price has broken and closed below. A break below this support could open the path towards lower levels, around 1.2520 / 1.2500.
Our position: With the Bank of England’s hint at imminent rate cuts, we maintain a bearish outlook on the Pound. The strategy is to seek short positions on confirmations of resistance rejections, particularly around the 1.25800 zone as a retest and 1.2650. Traders should keep a close eye on further economic releases. Until a significant shift in economic data or monetary policy occurs, the preference is to capitalize on the current downtrend, targeting lower supports for potential profit-taking.