Today, let’s discuss about the GBP/USD pair, and related trade opportunities. The pair is trading around the weekly and monthly highs. There is a possibility that the pair might move lower again. On the upside, there is a critical resistance at around the 1.6610/20 level.
Looking at the hourly chart of GBP/USD, the pair is forming a triangle, as can be seen in the chart below. The support for the same lies at around the 1.6560 level. There is a possibility that the pair might false break to the upside, and then trade lower again. On the other hand, it can break lower as well. If the pair breaks lower and closes below the triangle and support level, then we will jump into a sell trade. Remember, wait for the pair to close below the pattern before selling.
GBP/USD 1" title="GBP/USD 1" height="242" width="474">
Initial target should be around the daily 20 moving average, and final target could be around the next wedge support at around the 1.6370 level, as shown below. Stop should be placed above the last high created.
GBP/USD 2" title="GBP/USD 2" height="242" width="474">
Reviewing yesterday’s events and trades
Yesterday, the US core durable goods orders data was released. The outcome was disappointing as it registered a decline of 4.3%. The core durable goods orders also fell by 1.6%. After the release, the US dollar traded a touch lower, but later managed to recover some ground. Earlier, in the European session, the UK GDP data was released, which registered 0.7% growth rate as expected. The GBPUSD is trading in range after the release. Other than this, the CB consumer confidence was released in the NY session, which climbed from 77.5 to 80.7.
Fundamental Outlook for the day
Today is an important day as we have the Fed interest rate decision scheduled during the NY session. The market is expecting the fed to reduce bond buying by another $10B. If the fed delivers, then we can witness some dollar strength. On the other hand, if the Fed decides to wait, then the US dollar may slide. The chances of taper are high. Other than this, we also have RBNZ rate announcement, which can be an interesting one, as there is a lot of pressure on the central bank to hike the rates. We need to see whether there is any hint from the central bank regarding the possibility of rate hikes in the coming meetings.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EUR/USD, AUD/NZD, USD/CAD, GBP/CAD and EUR/JPY.