Short Sellers Celebrate as GBP/USD Breaks Below 1.34

Summary:

Data released Thursday by the U.K. Office for National Statistics showed that the U.K.'s International Labor Organization (ILO) unemployment rate fell to 4.9% in the three months ending in April, down from 5.0% in March. This figure was lower than the market's general expectation of 5.0%.

SELL GBPUSD

EXP

TRADING

1.32959

Entry Price

1.30000

1.35000

1.32340 -0.00549 -0.41%

0.0

Pips

Flat

1.30000

Exit Price

1.32959

Entry Price

1.35000

Fundamentals

Data from the UK Office for National Statistics showed that the inflation rate in May remained at a 13-month low of 2.8%, below previous forecasts by economists and the Bank of England. Jane Foley, Head of FX Strategy at Rabobank, noted that if market participants begin to believe that inflation has peaked and that there is limited room for further increases, the Bank of England may not need to raise interest rates at all this year. However, she also emphasized the need to closely monitor future data and pay attention to the signals emerging from Thursday’s vote. The market widely expects the Bank of England to keep interest rates unchanged on Thursday, though one or two policymakers—including Chief Economist Hugh Peel—may vote in favor of a rate hike. The interest rate swap market currently prices in only one rate hike this year, making Thursday particularly crucial for the UK market. In addition to the central bank meeting itself, labor market data will be released on the same day, providing further guidance on the direction of policy.

Technical Analysis

On the daily chart, the GBP/USD pair shows the Bollinger Bands widening downward and moving averages diverging downward, indicating that the downtrend remains intact. The RSI stands at 38, suggesting that market participants are predominantly selling. On the four-hour chart, the Bollinger Bands are widening downward, moving averages are diverging downward, and the MACD fast and slow lines have returned below the 0 line, indicating a high probability of further declines. The RSI stands at 32, reflecting a predominantly bearish sentiment among market participants. The recommended strategy is to sell on rallies.

Early Thursday morning Beijing time, the Federal Reserve announced its latest interest rate decision, keeping the target range for the federal funds rate unchanged at 3.50% to 3.75% for the fourth consecutive time. As the first policy statement since new Chair Kevin Warsh took office, the real impact of this meeting came from the updated Summary of Economic Projections.

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Trading Recommendation

Trading Direction: Sell

Entry Price: 1.33

Target Price: 1.3

Stop-Loss Price: 1.35

Support Levels: 1.32, 1.3, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Short Sellers Celebrate as GBP/USD Breaks Below 1.34

Risk Disclosure