Analysis of GBP/USD on April 14th. Raphael Bostic helps the US dollar
April 14, 2023 4:22 pm
For the GBP/USD pair, the wave markup still looks complicated. Since the current upward wave has exceeded the peak of the last wave b, the entire downward trend segment, consisting of waves a-b-c, can be considered complete. Although it is very weakly similar to the trend segment for the same period in the case of the euro currency, it should be recognized that both pairs have built three-wave downward sets of waves. If this is the case, then a new upward trend segment has begun for the pound. Since I can only single out one wave since March 8, there is every reason to assume that building a new trend segment will take a long time. Both pairs should build similar wave formations, but there have been some issues lately. In the near future, wave b may already begin for the pound, after which the growth of quotations should resume with targets located up to the 30 figure. Unless wave c turns out to be the same as in the case of the downward set of waves. But the news background needs to be clarified, and I would not bet on the strong growth of the British currency, relying only on it.
The Fed extends a helping hand to the dollar.
The GBP/USD pair rate on Friday fell by 50 basis points. It was evident that initially, the market was again set to raise the pair, but in the first half of the day, something happened that caused the dollar to rise. Nothing might have happened because, at that moment, the strengthening of the US currency was very insignificant. However, in the second half of the day, reports on retail trade and industrial production in the US were released, which could increase the market’s favor towards the dollar. But I believe these reports had nothing to do with it. However, the performance of Atlanta Fed President Raphael Bostic could have increased demand for the dollar.
On Friday, Bostic said in an interview with Reuters that the current state of affairs in the economy corresponds to another Fed interest rate hike. Such information surprised the market, as after the inflation report this week, many believed that the FOMC was done with tightening. But several monetary policy committee members have already made it clear that this is not the case. However, Bostic also admitted that the Fed might take a break to conduct a new analysis of economic data and forecasts for them. He noted that the regulator has many signals about the movement of inflation towards the target mark of 2%. He called on colleagues to carefully assess the state of the economy so as not to allow unnecessary overcooling. According to Bostic, raising rates to 5% only begins to affect inflation, which takes some time. Thus, the rate is likely to rise again, but when it is unknown. I would not bet on May.
General conclusions
The wave pattern of the GBP/USD pair suggests the completion of the downward trend segment. The wave markup is now ambiguous, as is the news background. I do not see factors supporting the British currency in the long term, and now the formation of wave b may begin. A decline in the pair is more likely, as all the waves of recent times are approximately the same in size. Trading can now be done from the 1.2440 mark, corresponding to 0.0% according to Fibonacci. Below it – we sell; above it – we cautiously buy.
The picture is similar to the EUR/USD pair on the larger wave scale, but some differences remain. At the moment, the upward corrective trend segment is completed. But the three-wave downward segment may also be completed already. And the new upward trend segment can also be three-wave and horizontal.
The material has been provided by InstaForex Company – www.instaforex.com
For the GBP/USD pair, the wave markup still looks complicated. Since the current upward wave has exceeded the peak of the last wave b, the entire downward trend segment, consisting of waves a-b-c, can be considered complete. Although it is very weakly similar to the trend segment for the same period in the case of the euro currency, it should be recognized that both pairs have built three-wave downward sets of waves. If this is the case, then a new upward trend segment has begun for the pound. Since I can only single out one wave since March 8, there is every reason to assume that building a new trend segment will take a long time. Both pairs should build similar wave formations, but there have been some issues lately. In the near future, wave b may already begin for the pound, after which the growth of quotations should resume with targets located up to the 30 figure. Unless wave c turns out to be the same as in the case of the downward set of waves. But the news background needs to be clarified, and I would not bet on the strong growth of the British currency, relying only on it.
The Fed extends a helping hand to the dollar.
The GBP/USD pair rate on Friday fell by 50 basis points. It was evident that initially, the market was again set to raise the pair, but in the first half of the day, something happened that caused the dollar to rise. Nothing might have happened because, at that moment, the strengthening of the US currency was very insignificant. However, in the second half of the day, reports on retail trade and industrial production in the US were released, which could increase the market’s favor towards the dollar. But I believe these reports had nothing to do with it. However, the performance of Atlanta Fed President Raphael Bostic could have increased demand for the dollar.
On Friday, Bostic said in an interview with Reuters that the current state of affairs in the economy corresponds to another Fed interest rate hike. Such information surprised the market, as after the inflation report this week, many believed that the FOMC was done with tightening. But several monetary policy committee members have already made it clear that this is not the case. However, Bostic also admitted that the Fed might take a break to conduct a new analysis of economic data and forecasts for them. He noted that the regulator has many signals about the movement of inflation towards the target mark of 2%. He called on colleagues to carefully assess the state of the economy so as not to allow unnecessary overcooling. According to Bostic, raising rates to 5% only begins to affect inflation, which takes some time. Thus, the rate is likely to rise again, but when it is unknown. I would not bet on May.
General conclusions
The wave pattern of the GBP/USD pair suggests the completion of the downward trend segment. The wave markup is now ambiguous, as is the news background. I do not see factors supporting the British currency in the long term, and now the formation of wave b may begin. A decline in the pair is more likely, as all the waves of recent times are approximately the same in size. Trading can now be done from the 1.2440 mark, corresponding to 0.0% according to Fibonacci. Below it – we sell; above it – we cautiously buy.
The picture is similar to the EUR/USD pair on the larger wave scale, but some differences remain. At the moment, the upward corrective trend segment is completed. But the three-wave downward segment may also be completed already. And the new upward trend segment can also be three-wave and horizontal.
The material has been provided by InstaForex Company – www.instaforex.com
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