Political Crisis! GBP/USD Under Siege

Summary:

The growing political uncertainty in the UK, coupled with the Labour Party’s heavy losses in recent local elections, is likely to weigh on the pound in the short term.

SELL GBPUSD

EXP

TRADING

1.35843

Entry Price

1.32000

1.37000

1.35387 -0.00018 -0.01%

0.0

Pips

Flat

1.32000

Exit Price

1.35843

Entry Price

1.37000

Fundamentals

An industry survey released on Monday showed that British recruiters became more cautious in April due to rising cost pressures stemming from the war in Iran, and the job market lost momentum. The monthly employment report, jointly released by accounting firm KPMG and the industry association Recruitment and Employment Confederation, noted that the number of permanent job vacancies fell at the fastest pace since January—just before the U.S. and Israel launched their military campaign against Iran. In fact, employers had indicated in March that the slump in hiring was showing signs of easing.

Investors are turning their attention to the U.S. Consumer Price Index data set to be released on Tuesday. The market expects the data to show a slight rise in inflation for April, as the conflict in the Middle East exerts upward pressure on energy prices. According to the market consensus, Bloomberg’s survey of analysts indicates that the U.S. CPI is expected to rise by 0.3% to 0.6% month-over-month in April, while core CPI is projected to increase by 0.2% to 0.4% month-over-month; On a year-over-year basis, the overall CPI is widely expected to be around 3.7%, while the core CPI is projected at 2.7%, a slight increase from March’s figures. There is significant uncertainty in the market regarding the trajectory of U.S. inflation against the backdrop of high oil prices.

Technical Analysis

On the daily chart, the GBP/USD pair shows narrowing Bollinger Bands and flat moving averages, indicating a potential reversal at any moment. The upward momentum of the MACD is gradually weakening, and the RSI stands at 56, suggesting that market participants are adopting a wait-and-see approach. On the 4-hour chart, the Bollinger Bands are narrowing, moving averages are flat, and the price is fluctuating near the middle band. The MACD fast and slow lines have formed a death cross, indicating a high probability that prices will decline toward the 200-period EMA. The RSI stands at 48, and market participants are largely adopting a wait-and-see approach. Strategically, look to sell on rallies.

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.358

Target Price: 1.32

Stop-Loss Price: 1.37

Support Levels: 1.32, 1.3, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Political Crisis! GBP/USD Under Siege

Risk Disclosure