GBPUSD At Key Resistance
The rally in GBPUSD has seen price trading all the way back up to retest the 2021 highs around 1.4248. For now, this level is holding as resistance, helped by the broken bull channel low which has also helped cap the move. With plenty of bearish divergence in the RSI and MACD indicators there is room for a deeper correction here towards the 1.3997 level.
In terms of the fundamental backdrop, the UK environment is improving rapidly. The government’s success in its vaccination program and the success so far with sticking to its reopening schedule have allowed the economy to rebound sharply. However, doubts are creeping in ahead of the final date, June 21st. A rise in the number of cases of the variant first found in India has created some concern over whether the government will delay full reopening if cases continue to rise.
This uncertainty is reflected in the current consolidation we’re seeing. The government is due to make a decision by June 21st and the outcomes are clear; stick to the plan, GBP goes higher, delay reopening, GBP goes lower.
Key Data to Watch
On the US side of the coin we have some big releases this week which could cause Dollar volatility. The labour reports on Friday will be a big market focus and should the data come in stronger than expected, this is likely to bring Fed tapering back into focus, sending USD higher.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.