GBP/USD: Teetering at the Edge of Critical Daily Resistance!
Dear Traders,
In assessing the Cable pair through a review of its daily chart, the current landscape appears notably turbulent. My analysis indicates a strong indication for weakness in the GBP throughout Q4 2023 and Q1 2024. This forecast is substantiated by several critical factors affecting the UK economy:
Firstly, persistent high inflation exceeding 6% remains a pressing issue, compounded by a sustained 50% surge in energy prices that show no signs of abating. The burden of exorbitantly high mortgage rates, ranging between 8-9%, has led to significant remortgaging among numerous households, particularly those transitioning from 2-year and 5-year fixed-rate mortgages. Should the Bank of England (BOE) opt to maintain elevated interest rates, the potential for a substantial economic downturn looms large.
Another concerning aspect is the precarious financial state of approximately 30% of councils, facing insolvency due to their inability to meet financial obligations stemming from the housing and energy crises. The substantial scale of subsidised living in the UK further exacerbates these challenges.
Consequently, barring a substantial shift in the prevailing market dynamics, it is my firm belief that the GBP is poised for a period of capitulation in the coming months.
In assessing the Cable pair through a review of its daily chart, the current landscape appears notably turbulent. My analysis indicates a strong indication for weakness in the GBP throughout Q4 2023 and Q1 2024. This forecast is substantiated by several critical factors affecting the UK economy:
Firstly, persistent high inflation exceeding 6% remains a pressing issue, compounded by a sustained 50% surge in energy prices that show no signs of abating. The burden of exorbitantly high mortgage rates, ranging between 8-9%, has led to significant remortgaging among numerous households, particularly those transitioning from 2-year and 5-year fixed-rate mortgages. Should the Bank of England (BOE) opt to maintain elevated interest rates, the potential for a substantial economic downturn looms large.
Another concerning aspect is the precarious financial state of approximately 30% of councils, facing insolvency due to their inability to meet financial obligations stemming from the housing and energy crises. The substantial scale of subsidised living in the UK further exacerbates these challenges.
Consequently, barring a substantial shift in the prevailing market dynamics, it is my firm belief that the GBP is poised for a period of capitulation in the coming months.
Trade closed manually:
Trade played out perfectly, got out at 1:2 Risk to reward ratio! GBP is holding onto dear life.
Comment:
The trade is still doing phenomenally well, my psychology wasn't quite there so I pulled out early, but looks like bottom supply zone will be tested.