The lack of a rate cut decision from the Bank of England means the British pound remains strong, though it is slowly losing ground. We may need significantly weaker economic data from the UK or data confirming further declines in inflation. The annual inflation rate is almost at target, but core inflation remains too high.
Time Frame D1
On the daily chart (D1), we see GBPUSD slowly succumbing to declines, gradually breaking through the 50 SMA. The next support is at the red 200 SMA, followed by levels at 1.2630 and later 1.2380. Key here will be the UK inflation data for June or a rise in US inflation.
On the D1 chart, we see a steep resistance line; attempts to push the rate higher are increasingly being halted, but each rebound from the line is quickly restrained. One side must win: either the rate will accelerate its decline, or it will bounce off the average or support and go up.
Time Frame H1
On the hourly chart (H1), the resistance line is more visible; today we should see an attempt to break it. If the resistance holds, the rate should retreat, possibly towards a new low. A strong session on the US stock market should favor testing the resistance line, while a weak one would halt the attempt to break through it. Technically, the scenario of a slow decline and forming a new low on the H1 chart is more likely.
Time Frame M15
On the 15-minute chart (M15), we see that if GBPUSD bounces off the resistance line on H1, it may still attempt to bounce off the 200 SMA on M15. However, the higher TF (H1) picture is more important, suggesting the price should move towards the nearest resistance. In summary, if today's US session does not provide additional strength, GBPUSD should continue to drift lower.
Economic Calendar for This Week
Key data that may impact the market:
Tuesday: US CB Consumer Confidence (June),
Wednesday: US New Home Sales (May),
Thursday: US GDP (Q1),
Friday: UK GDP (QoQ),
Friday: US Core PCE (May).
Comments