The GBP/USD pair has experienced a notable downturn during the last trading session, diverging from its previously bullish path. This movement comes in the wake of the U.S. CPI data coming in higher than expected, which has generally strengthened the USD across the board.
Technical analysis: The pair broke through the ascending support trendline, indicating a shift in market sentiment from buying on dips to a potential trend reversal. The GBP/USD found some support around the 1.2610 area after the descent. The bearish momentum has pushed prices well below the 1.2700 handle, and the speed of the drop suggests that bearish traders are in control, with the possibility of extending the decline if the 1.2610 support doesn't hold.
Our position: We are adopting a more conservative stance in light of recent bearish signals and the unexpected strength of the USD. While the market is still digesting the implications of the CPI data, we are monitoring the 1.2610 level closely. A consolidation above this level could offer a chance for buyers, but if this support fails, we may look for short positions, targeting further supports. The market's reaction to upcoming economic releases will be crucial in determining the next significant move for the GBP/USD pair.
Longterm we are looking for buy positions, but we are careful as the pair is currently showing weakness in the short term. As long as tomorrow's CPI report from the UK is positive, it should be pushing upwards again after this pullback.
Technical analysis: The pair broke through the ascending support trendline, indicating a shift in market sentiment from buying on dips to a potential trend reversal. The GBP/USD found some support around the 1.2610 area after the descent. The bearish momentum has pushed prices well below the 1.2700 handle, and the speed of the drop suggests that bearish traders are in control, with the possibility of extending the decline if the 1.2610 support doesn't hold.
Our position: We are adopting a more conservative stance in light of recent bearish signals and the unexpected strength of the USD. While the market is still digesting the implications of the CPI data, we are monitoring the 1.2610 level closely. A consolidation above this level could offer a chance for buyers, but if this support fails, we may look for short positions, targeting further supports. The market's reaction to upcoming economic releases will be crucial in determining the next significant move for the GBP/USD pair.
Longterm we are looking for buy positions, but we are careful as the pair is currently showing weakness in the short term. As long as tomorrow's CPI report from the UK is positive, it should be pushing upwards again after this pullback.