Forecast for GBP/USD on April 6. Loretta Mester expects the Fed rate to be above 5%
April 6, 2023 1:23 pm
On Wednesday, based on the hourly chart, the GBP/USD pair reversed in favor of the U.S. dollar and returned to 1.2432. The rebound of quotes from this level will benefit the British pound and the resumption of growth toward the corrective level of 161.8% (1.2588). Closing quotes at 1.2432 will lead us to anticipate a continuation of the decline toward the 1.2342 level. The upward trend corridor continues to characterize market participants’ current “bullish” sentiment.
This week, business activity and labor market reports are not the only things of interest to traders. Yesterday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, lectured. She also stated in her address that the Fed rate should rise above 5% and continue at this level for an extended period. Technically speaking, Mester did not provide any new information to traders since the market is anticipating at least one additional rate increase of 0.25%, and its present level is 5%. Consequently, the rate will almost certainly exceed 5%. Mester also stated that monetary policy tightening is still required to curb inflation. She also permitted a rate hike of a greater magnitude if the U.S. economy rebounds. According to her, the banking sector has emerged from a challenging period, and the regulator continues implementing the Q.T. program in support of rate hikes. Mester anticipates that inflation will decline to 3.75 percent by the end of the year and that the economy will improve moderately.
According to my assessment, the president of the Federal Reserve Bank of Cleveland made statements that allowed for a more significant increase in the interest rate. Inflation may eventually stop falling. Thus further tightening may be necessary. The real forecast for the rate is between 5.25 and 5.75 %.
On the 4-hour chart, the pair reversed in favor of the British currency and maintained its ascent, closing above the 1.2441 mark. The CSI indicator generated a new “bearish” divergence, but the three previous “bearish” divergences did not significantly decline the British pound. There have been an adequate number of sell signals recently, but the bears are on holiday. In the event of a rebound from 1.2441, the British pound can now target the Fibo level of 100.0% (1.2674). If not, the decline may persist.
Report on Commitments of Traders (COT):
The sentiment of the “Non-commercial” group of traders has moved little over the past week. The number of Long contracts held by speculators declined by 297 units, while the number of Short contracts grew by 3,289. The general sentiment of the key market participants remains “bearish,” and the number of Short contracts remains significantly greater than the number of Long contracts. During the past few months, the situation has steadily shifted in favor of the pound. Still, the difference between the number of Long and Short positions speculators hold remains substantial. Consequently, the forecast for the pound is improved, yet the average British pound has not grown or decreased over the past few months. On the 4-hour chart, there was an exit outside the descending corridor, and the pound could be supported at this time. Yet, I observe that many factors contradict each other, and the information background does not offer much support to the pound.
News calendar for the United States and the United Kingdom:
U.S. – number of initial applications for unemployment benefits (12:30 UTC)
The economic calendars of the United Kingdom and the United States contain a report of varying importance on Thursday. Today, the impact of the information context on the sentiment of traders may be minimal.
GBP/USD forecast and trading suggestions:
I recommend selling the British pound when the hourly chart closes below 1.2432 with a target of 1.2342. Purchasing the British pound is risky because it has risen substantially, and we have recently received a vast amount of sell signals.
The material has been provided by InstaForex Company – www.instaforex.com
On Wednesday, based on the hourly chart, the GBP/USD pair reversed in favor of the U.S. dollar and returned to 1.2432. The rebound of quotes from this level will benefit the British pound and the resumption of growth toward the corrective level of 161.8% (1.2588). Closing quotes at 1.2432 will lead us to anticipate a continuation of the decline toward the 1.2342 level. The upward trend corridor continues to characterize market participants’ current “bullish” sentiment.
This week, business activity and labor market reports are not the only things of interest to traders. Yesterday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, lectured. She also stated in her address that the Fed rate should rise above 5% and continue at this level for an extended period. Technically speaking, Mester did not provide any new information to traders since the market is anticipating at least one additional rate increase of 0.25%, and its present level is 5%. Consequently, the rate will almost certainly exceed 5%. Mester also stated that monetary policy tightening is still required to curb inflation. She also permitted a rate hike of a greater magnitude if the U.S. economy rebounds. According to her, the banking sector has emerged from a challenging period, and the regulator continues implementing the Q.T. program in support of rate hikes. Mester anticipates that inflation will decline to 3.75 percent by the end of the year and that the economy will improve moderately.
According to my assessment, the president of the Federal Reserve Bank of Cleveland made statements that allowed for a more significant increase in the interest rate. Inflation may eventually stop falling. Thus further tightening may be necessary. The real forecast for the rate is between 5.25 and 5.75 %.
On the 4-hour chart, the pair reversed in favor of the British currency and maintained its ascent, closing above the 1.2441 mark. The CSI indicator generated a new “bearish” divergence, but the three previous “bearish” divergences did not significantly decline the British pound. There have been an adequate number of sell signals recently, but the bears are on holiday. In the event of a rebound from 1.2441, the British pound can now target the Fibo level of 100.0% (1.2674). If not, the decline may persist.
Report on Commitments of Traders (COT):
The sentiment of the “Non-commercial” group of traders has moved little over the past week. The number of Long contracts held by speculators declined by 297 units, while the number of Short contracts grew by 3,289. The general sentiment of the key market participants remains “bearish,” and the number of Short contracts remains significantly greater than the number of Long contracts. During the past few months, the situation has steadily shifted in favor of the pound. Still, the difference between the number of Long and Short positions speculators hold remains substantial. Consequently, the forecast for the pound is improved, yet the average British pound has not grown or decreased over the past few months. On the 4-hour chart, there was an exit outside the descending corridor, and the pound could be supported at this time. Yet, I observe that many factors contradict each other, and the information background does not offer much support to the pound.
News calendar for the United States and the United Kingdom:
U.S. – number of initial applications for unemployment benefits (12:30 UTC)
The economic calendars of the United Kingdom and the United States contain a report of varying importance on Thursday. Today, the impact of the information context on the sentiment of traders may be minimal.
GBP/USD forecast and trading suggestions:
I recommend selling the British pound when the hourly chart closes below 1.2432 with a target of 1.2342. Purchasing the British pound is risky because it has risen substantially, and we have recently received a vast amount of sell signals.
The material has been provided by InstaForex Company – www.instaforex.com
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