Bulls Encountered Resistance, and Both Fundamental and Technical Indicators Are Showing Signs of Weakness

Economic

Forex

Summary:

The GBPUSD remained under pressure on Wednesday, trading below 1.3500. With UK inflation meeting its target and potential disruptions to central bank plans stemming from the Middle East conflict, the asset may experience further declines.

BUY GBPUSD

EXP

EXPIRED

1.33500

Entry Price

1.38130

1.31900

1.33293 -0.00019 -0.01%

Pips

EXPIRED

1.31900

1.36499

Exit Price

1.33500

Entry Price

1.38130

Fundamentals

The British pound underperformed against other currencies on Tuesday, influenced by the escalating conflict between Israel and Iran. The intensification of geopolitical tensions in the Middle East dampened investor risk appetite, bolstering the U.S. dollar's resilience against other currencies and subsequently pressuring the pound.

According to the Office for National Statistics, the May Consumer Price Index (CPI) rose by 3.4% year-over-year, aligning with the Bank of England's projections. The closely watched services inflation rate decreased from 5.4% to 4.7%, also meeting the central bank's expectations. This figure is considered a key indicator of domestic price pressures.

Despite the overall trend indicating a gradual decline in inflation, market participants may be focusing on the renewed acceleration in goods prices, which increased by 2.0% year-over-year, reaching the highest level since November 2023.

The data reveals that while airfare and fuel costs have decreased, these declines have been offset by increases in food prices, including items like chocolate and meat, as well as furniture and household goods such as refrigerators and vacuum cleaners.

Following the release of this data, the British pound experienced volatile trading. As of Tuesday, market expectations were largely pricing in two additional 25-basis-point rate cuts by the Bank of England this year. Furthermore, the conflict between Israel and Iran could complicate the Bank of England's future policy decisions, given that oil prices have risen approximately 14% over the past week. Although investors and economists consider a rate cut by the central bank on Thursday highly improbable, the August meeting may still allow for further action.

Bulls Encountered Resistance, and Both Fundamental and Technical Indicators Are Showing Signs of Weakness_1

Technical Analysis

The GBPUSD experienced a significant decline on Tuesday, validating the strength of a short-term top. The asset previously breached 1.3600, reaching a multi-year high, but despite the recent pullback, the prevailing trend remains bullish.

The 4-hour MACD for the GBPUSD currently exhibits bearish divergence. While there has been a slight intraday rebound, a resumption of the downward movement is anticipated in the short term, with a retracement to the 55-day SMA (currently at 1.3328). A test of this support level could potentially trigger a bounce. A break above 1.3631 would reactivate the rally from 1.2099, with the potential to surpass the 100% Fibonacci projection level from 1.2099, targeting 1.3813.

Conversely, a sustained break below the 55-day SMA would signal a deeper correction in progress.

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.3350

Target Price: 1.3813

Stop Loss: 1.3190

Valid Until: July 3, 2025 23:55:00

Support: 1.3414, 1.3335, 1.3310

Resistance: 1.3477, 1.3520, 1.3592

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Eva Chen

Commodity

Middle East Situation

Summary:

WTI crude oil continues to demonstrate resilience within its ascending channel structure, currently consolidating near US$74.65; market concerns regarding escalating tensions between Israel and Iran are curbing downside attempts in crude prices and may re-introduce bullish pressure.

BUY WTI

Close Time

CLOSED

70.600

Entry Price

80.000

65.000

59.983 +0.174 +0.29%

560.0

Pips

Loss

65.000

64.844

Exit Price

70.600

Entry Price

80.000