GBPUSD might be the most hard-predicted pair because of the balance among fundamental factors. While UK economy is performing very well, US economy gradually get back developing momentum plus FED taper decision.
We know definitely that BoE will not raise interest rate soon despite of the unemployment rate decline. 7% threshold might quickly reach. The problem here what will BoE do when this benchmark is achieved. BoE needs to provide more forward guidance, and this would impact on long term move of GBPUSD . Next week, there are three important economic data of UK need to be considers:
- Markit Manufacturing PMI
- Markit Service PMI
- BoE Meeting.
Among them, I pay much attention on BoE Meeting on Thursday, and I expect BoE will provide more guidance. I am thinking in my head, what will they say ? and what is the impact on GBPUSD ?. They need to set next targets such as changing unemployment rate benchmark: 6.5% for example or recovering in manufacturing activities as well as advance in UK citizen income. Thus, I don’t expect their speech would be hawkish. At least, their stance has to be neutral and better is dovish.
Next week, with a lot of US economic data are released, I believe GBPUSD falls down to next supports.
I draw on the chart:
- Main .
Price approached and prepares to go into “cyclone eye”.
The purple line : The main provides good support. Price tested this many times, and now price is preparing to break this .
1.6440 level coincides SMA50.
SMA100 now coincides 1.624 level : very strong .
Look at on the chart: there is a very strong divergence between Price pattern and pattern. In the long term, GBPUSD confronts with the strong SELL force. It’s very difficult to GBPUSD to rally continually.
I think that GBPUSD quickly touches 1.625 level next week, but before testing it, I think GBPUSD will test 1.63 first. Thus, I will SHORT GBPUSD to 1.63 level, stop loss at 1.66 level. 140 pips from current price.