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GBPUSD: The Dollar's Rally Is Limited, and the Pound May Return to Gains

Forex MarketThe Fed
Summary:

As energy prices are falling, expectations of U.S. inflation have eased. The US dollar still remains weak, which could push GBPUSD further up.

Buy GBPUSD
End Time
CLOSED

1.22000

ENTRY PRICE

1.24000

TGT PRICE

1.20600

SL PRICE

1.23971 +0.00060 +0.04%

1400

Points

Loss

1.20600

SL PRICE

1.20575

CLOSING

1.22000

ENTRY PRICE

1.24000

TGT PRICE

Fundamentals

Since there are no outstanding moves on the British side at the moment, the trend direction of the pound mainly depends on the US dollar. US inflation data for November and the Fed's interest rate decision will be released next week, while this week is a silent period for officials before the Fed's decision. Investors are weighing the Fed's policy outlook and the possibility of a recession caused by increasing rates. Therefore, the current trading in the market is relatively cautious and somewhat wobbly. With service sector activity and employment data performing positively, the Fed may still have a long way to go in fighting inflation. And the dollar continues to be supported by the potential of higher interest rate peaks.
However, since concerns about the economic slowdown will strike global energy demand, the price of energy sources such as Brent oil and natural gas has been sliding recently. With the relaxation of market inflation expectations, the growth of the US PPI in November is predicted to be 7.2%, apparently below that in the previous month of 8.0%. It could boost expectations of the slowdown in the Fed’s rate hikes and keep weighing on the dollar.
In addition, with the reopening of China's pandemic prevention and control policies, the market risk appetite has rebounded significantly, which may further bolster non-US currencies.

Technical Analysis

GBPUSD: The Dollar's Rally Is Limited, and the Pound May Return to Gains_1Trading at the 4-hour chart, GBPUSD has fluctuated to the upside since the end of September, and the increase is very impressive. It has risen about 2,000 from the bottom of the year, and the trend may have shifted long. However, the rally in recent has decelerated evidently, which has still not been out of the high consolidation situation. While the indicator RSI has shown a continuous bearish divergence from the high, which is indeed a need for a pullback. It is necessary to wait for an opportunity to go long after fully adjusted.
It is recommended to go long at lows and try to take a long position when the price pulls back to around 1.2200. The target is set around the upper-pressure level at 1.2400 and the stop loss is set below 1.2100.

Trading Recommendations

Trading Direction: Long
Entry Price: 1.2200
Target Price: 1.2400
Stop Loss: 1.2060
Support: 1.2117/1.2200
Resistance: 1.2400/1.2330
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or signal, or any other product is suitable for you based on your investment objectives and financial situation.

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Winkelmann

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7 years of stock market, foreign exchange, precious metal and other trading and analysis experience, based on fundamental, technical support, biased towards the top-down transaction logic, focusing on macro cycle and risk control, multi-purpose supply and demand theoretical prediction price Changes, balances the impact of transactions, chips distribution and market sentiment, and steady.

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