GBP/USD. June 26th. Powell’s speeches could cause market turmoil again
June 26, 2023 3:22 pm
On the hourly chart, the GBP/USD pair continued to trade slightly above the corrective level of 100.0% (1.2676) on Friday, and it remained in this area on Monday. The British currency’s growth halted last week, and the pair has not moved up or down. The Bank of England’s meeting was quite important, and even more significant was the decision to raise the rate by 0.50%, which surprised many. However, the market reacted quite modestly. A rebound in quotes from the level of 1.2676 will work in favor of the EU currency, with some growth towards the Fibonacci level of 127.2% (1.2777). Consolidation of quotes below the level of 1.2676 will increase the probability of further decline towards the 1.2590 level and the ascending trendline.
This week in the UK, only the GDP report for the first quarter will be released, which could be more interesting. The economy will once again show a result close to 0%. However, there will be important reports and economic events in the US. Jerome Powell will speak twice, and his speeches in Congress last week sparked interest among traders and impacted the market. The same could happen this week. Currently, there are debates in the market about how many more times the FOMC will raise rates. Opinions are divided 50/50. Some believe there will be one more increase, while others expect two. In any case, we are talking about new tightening measures that could support the dollar.
If Jerome Powell’s rhetoric is hawkish enough, the dollar may continue to strengthen this week.
On the 4-hour chart, the pair has reversed in favor of the American currency and resumed its downward movement toward the corrective level of 100.0% (1.2674). A rebound in quotes from this level will favor the pound and a resumption of growth towards the 1.2860 level. Closing below 1.2674 will increase the chances of a further decline toward the 1.2441 level. Currently, no divergences are observed in any indicator.
Commitments of Traders (COT) report:
During the last reporting week, the sentiment of the “Non-commercial” trader category became slightly less bullish. The number of long contracts held by speculators increased by 11,320 units, but the number of short contracts increased by 17,069. The overall sentiment of large players remains predominantly bullish, but the number of long and short contracts is now almost equal – 76,000 and 69,000, respectively. The British currency has good prospects for further growth, and the current information background supports it more than the dollar. However, I do not expect a strong rise in the pound sterling in the coming months. This week’s outcome of the Bank of England’s meeting will help clarify the pound’s prospects.
News calendar for the US and the UK:
Monday’s economic events calendar contains a few interesting entries. The influence of the information background on traders’ sentiment for the rest of the day will be absent.
GBP/USD forecast and trader advice:
I advised opening sales of the British currency in case of a rebound on the hourly chart from the level of 1.2777, with a target of 1.2676. This target was almost reached. New sales can be considered when closing below 1.2676, with targets at 1.2590 and 1.2536. Buying the British currency is possible in the event of a rebound from the level of 1.2676 on the hourly chart, with a target of 1.2777.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair continued to trade slightly above the corrective level of 100.0% (1.2676) on Friday, and it remained in this area on Monday. The British currency’s growth halted last week, and the pair has not moved up or down. The Bank of England’s meeting was quite important, and even more significant was the decision to raise the rate by 0.50%, which surprised many. However, the market reacted quite modestly. A rebound in quotes from the level of 1.2676 will work in favor of the EU currency, with some growth towards the Fibonacci level of 127.2% (1.2777). Consolidation of quotes below the level of 1.2676 will increase the probability of further decline towards the 1.2590 level and the ascending trendline.
This week in the UK, only the GDP report for the first quarter will be released, which could be more interesting. The economy will once again show a result close to 0%. However, there will be important reports and economic events in the US. Jerome Powell will speak twice, and his speeches in Congress last week sparked interest among traders and impacted the market. The same could happen this week. Currently, there are debates in the market about how many more times the FOMC will raise rates. Opinions are divided 50/50. Some believe there will be one more increase, while others expect two. In any case, we are talking about new tightening measures that could support the dollar.
If Jerome Powell’s rhetoric is hawkish enough, the dollar may continue to strengthen this week.
On the 4-hour chart, the pair has reversed in favor of the American currency and resumed its downward movement toward the corrective level of 100.0% (1.2674). A rebound in quotes from this level will favor the pound and a resumption of growth towards the 1.2860 level. Closing below 1.2674 will increase the chances of a further decline toward the 1.2441 level. Currently, no divergences are observed in any indicator.
Commitments of Traders (COT) report:
During the last reporting week, the sentiment of the “Non-commercial” trader category became slightly less bullish. The number of long contracts held by speculators increased by 11,320 units, but the number of short contracts increased by 17,069. The overall sentiment of large players remains predominantly bullish, but the number of long and short contracts is now almost equal – 76,000 and 69,000, respectively. The British currency has good prospects for further growth, and the current information background supports it more than the dollar. However, I do not expect a strong rise in the pound sterling in the coming months. This week’s outcome of the Bank of England’s meeting will help clarify the pound’s prospects.
News calendar for the US and the UK:
Monday’s economic events calendar contains a few interesting entries. The influence of the information background on traders’ sentiment for the rest of the day will be absent.
GBP/USD forecast and trader advice:
I advised opening sales of the British currency in case of a rebound on the hourly chart from the level of 1.2777, with a target of 1.2676. This target was almost reached. New sales can be considered when closing below 1.2676, with targets at 1.2590 and 1.2536. Buying the British currency is possible in the event of a rebound from the level of 1.2676 on the hourly chart, with a target of 1.2777.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: