After a sell off in the UK Pound from the election last week, we saw a hawkish BOE this week. Well... another flip flop in the market that might have left traders confused.
Here's my perspective on GBPUSD - I believe we still have more down side for this pair, perhaps towards the 1.2510 area.
Technical analysis wise -
1) We have a bearish impulse formed, and price seems to be in a correction now;
2) US Dollar Index (DXY) as shared earlier this week was previously in a reversal area, and bounced off strongly -
Fundamental analysis wise -
1) The FED is hawkish and potential rate hike is still very much on the table;
2) The BOE is looking to push for a rate hike, but the current rise in inflation is very much due to the short term depreciation of the Pound - fundamentally and economic wise, not as strong a case as compared to the US.
**However, the downside risk on this still hinges on Trump and Yellen. There are still uncertainties in the US economy and political scene.
Taking into account all these, I believe there is still some small upside potential for GBPUSD to move, perhaps towards 1.2870 area, to complete the correction before we might see another drop in GBPUSD.
Again, I would like to emphasise that we are not saying it's gonna fall for sure, but just a higher probability of it falling then rising impulsively - at least from what we are seeing now.
Here's my perspective on GBPUSD - I believe we still have more down side for this pair, perhaps towards the 1.2510 area.
Technical analysis wise -
1) We have a bearish impulse formed, and price seems to be in a correction now;
2) US Dollar Index (DXY) as shared earlier this week was previously in a reversal area, and bounced off strongly -
Fundamental analysis wise -
1) The FED is hawkish and potential rate hike is still very much on the table;
2) The BOE is looking to push for a rate hike, but the current rise in inflation is very much due to the short term depreciation of the Pound - fundamentally and economic wise, not as strong a case as compared to the US.
**However, the downside risk on this still hinges on Trump and Yellen. There are still uncertainties in the US economy and political scene.
Taking into account all these, I believe there is still some small upside potential for GBPUSD to move, perhaps towards 1.2870 area, to complete the correction before we might see another drop in GBPUSD.
Again, I would like to emphasise that we are not saying it's gonna fall for sure, but just a higher probability of it falling then rising impulsively - at least from what we are seeing now.
