The USD index fell from 94…
GBP/USD: outlook for July 3-7
Sterling erased its post-election losses and rose to 1.3010 in the past week after the Bank of England Governor Mark Carney said on Wednesday that they may need to raise interest rates despite a weakening economy. It was a radical U-turn from its last week’s dovish commentary, so traders reacted accordingly. The pound got some additional support after British Prime Minister Theresa May won backing for her Brexit and austerity agenda thanks to decisive votes of the small Northern Irish party.
The current price action is clearly showing the characteristics of the bullish trending phase, but we would not recommend rushing into long trades in the near term. Britain enters a period of uncertainty negotiating its exit from the EU which should hurt the GBP. So, the US dollar will probably try to recoup its losses next week. The economic data coming from the US may help if the figures come out upbeat. There will be US manufacturing PMI, unemployment claims, jobless rate, average hourly earnings and, what is more important, NFP. You should also note in your diary the release of FOMC meeting minutes on Wednesday. The British pound might also be influenced by the data flow out of the UK. Manufacturing, construction, and services PMIs will be released at the beginning of the week. Then, you should particularly be focused on Friday’s economic releases (Halifax housing price index, manufacturing production and goods trade balance).
On the technical chart, GBP/USD reached 1.3030 but failed to climb higher. A break of support at 1.2920 (Thursday’s low) will allow us to target lower levels at 1.2865 (50-day SMA), 1.2795 (Fibo 23.6% traced from this year low). On the upside, the target at 1.3045/50 appears to be within reach. Only after the break of these levels, the pound will be able to rise higher.
The last consolidation resulted in a massive bullish rally. Finally, the price faced resistance at 1.1365, so bears are likely going to...
The 55 Moving Average has acted as a resistance, so there’re a “Shooting Star” and a “Doji”.
GBP/CHF broke pivotal resistance level 1…