Forex price setups for US dollar and major pairs. The muted response to the BoEs unexpected rate of interest increase.
GBP: Forex Market Key Points for Pound vs USD, Euro and AUD
Even after the BoE’s unexpected 50-bp hike last week, the GBPUSD exchange rate is maintaining under strong barrier.
Speculation long GBP positions have risen to values seen before Covid era.
Forex outlook for GBP
The lackluster response to the BoE’s unexpected rise in interest rates last week may indicate that the GBP’s recent advance vs some of its competitors is about to experience a slight hiccup.
The BoE shocked investors by increasing the benchmark rate by 50 bps (vs. 25 bps predicted) to 5%. its biggest hike as of 2008 as well as its biggest boost since Feb. BoE noted that second-round impacts in pricing and wage shifts. Resulting from outside jolts will probably to require more time to subside rather than they did to appear. According to figures released this week. The UK overall inflation stayed flat at 8.7% on a yearly basis in May, which put more strain on the Bank of England to take action.
After halting in April, the BoE increased its key interest rate by 25 bps in May prior to the previous week’s increase. The benchmark rate is currently expected to top near 6.25 percent before the close of the year. Estimates for growth in the economy for this year have been updated as a result of a strong run of UK statistics from the middle of February. Severe tightening up, nonetheless might harm 2019 prospects, increase the chance of a downturn, and threaten the overvalued GBP.
GBPUSD: Probably a weak skew
A significant obstacle on the weekly graphs, together with negative divergence (increasing price accompanied with halting in pace),. Suggests that the GBP/SD rise is gradually losing steam. While the duo hits the 200-week MA (currently at approximately 1.2900). Speculating long GBP posture is returning to its pre-Covid state, broadly aligning with a trend upward from middle of 2022.
In the immediate future, the GBPUSD might remain with a softer tilt. With any downside being limited within a convergent buffer to roughly 1.2625-1.2675. Which includes a modest ascending line from June’s start and coincides along the 89-period MA.. Plus, the bottom margin of an Ichimoku cloud in the 240-min graphs. But a dip under the safety net will raise the likelihood of a more serious decline towards 1.2500 region.
The daily candlestick graphs with various hues indicate that the overall trend of GBPUSD is still rising. The advance that took place to a high of one year in May. It verified the elevated-peaks & higher-lows pattern from the end of 2022. Opening the way to certain a medium-term gain.
GBPAUD:
Given the strong horizontal trend-line barrier around roughly 1.9200, the upward momentum in the GBPAUD bounce. From mid-June could not have been the beginning of a fresh wave upward. But as long as the intermediate support at 1.8450 holds firm. The cross’s course of least barrier will continue to be flat to upward. Any fall under might lead to the 1.8250 bottom from the beginning of April.
EURGBP: Remaining above important support
It is noted that the price decline appeared to be slowing as EURGBP tested a crucial bottom at the Dec bottom of 0.8545. Over the short future, there may be a little consolidation or a slight comeback. The peak from last week, 0.8635, is the first point of opposition. Any breach beyond would indicate a reduction in the tension immediately under.
