Today we would focus on the GBP/USD currency pair. The pair’s current movements seem a bit difficult to predict due to the stressed political environment in both the United Kingdom, where issues regarding the government and its ability to negotiate a good Brexit deal remain current, and in the United States, where the Republican health care reform failed and President Trump is quickly losing public support.
The GBP/USD pair's trend right now appears to be consolidating. We expect to see some bullish movement in the prices. Alternatively, if the pair sheds more than 200 pips in losses, then that’s our signal that the bears are in charge of the market. However, we remain optimistic about a more bullish trend behaviour, especially if we see the GBP/USD surpass the level of 1.3100.
The pound is riding on the support of the most recent Retail Sales report from the UK which demonstrated an increase of 0.6%, against the forecasted 0.4%. Investors expect that this would positively influence the Bank of England to begin considering a more hawkish approach to monetary policy, though it is unlikely we would see that in practice in the next few months, since inflation is still not at a healthy level.
It is crucial to pay attention to the levels of resistance located at 1.3105 and 1.3175. Below the pair we also have important support levels at 1.2948 and 1.2861. In fact, as of the moment of this article’s publication the pair is located right at the support level at 1.2973. It’s still above the pivot point of 1.2945, but the GBP/USD is volatile right now, so it’s important to stay alert. Most technical indicators agree on a strong sell.
