GBP/USD ANALYSIS
- Cable recovers after early losses.
- GBP/USD testing key space of confluence.
CABLE FUNDAMENTAL FORECAST: BEARISH
Cable tried to claw again losses this week after yesterday’s stronger than anticipated UK inflation knowledge, whereas the U.S. greenback slipped beneath the psychological 100 mark on the Greenback Index (DXY). Markets revised U.S. inflation decrease as proven by the graph beneath nevertheless, with provide chain bottlenecks nonetheless inflicting inflationary stress, I feel the decline is not going to be as speedy as presently priced in leaving room for GBP/USD upside.
U.S. 5-YEAR FORWARD INFLATION LINKED SWAP
Supply: Refinitiv
Through the European session on Thursday, the greenback rallied with assist from a constructive April client sentiment beat (see financial calendar beneath), whereas blended jobless claims and retail gross sales knowledge have been taken in a constructive mild.
GBP/USD ECONOMIC CALENDAR
Supply: DailyFX Financial Calendar
Subsequent week the one excessive impression financial knowledge comes from the UK within the type of PMI knowledge which is predicted to come back in barely decrease than earlier readings. A weaker than anticipated determine may add to bearish bets on the cable pairing. The UK financial system doesn’t appear to be in fine condition relative to the U.S. with client confidence on the decline, rampant inflation and the tip of free COVID-19 testing may add to damaging knowledge prints to come back.
Supply: DailyFX Financial Calendar
GBP/USDTECHNICAL ANALYSIS
GBP/USD DAILY CHART
Chart ready by Warren Venketas, IG
The each day GBP/USD chart reveals value motion pushing off assist at 1.3000 coinciding with the upward sloping trendline on the RSI indicator (blue). As of but, bulls have defended the 1.3000 assist stage however ought to markets revisit this key space of assist, I consider it’s only a matter of time earlier than it offers means within the medium-term. Quick-term, there may be nonetheless room for a transfer in direction of the 1.3164 (38.2% Fibonacci) earlier than a subsequent transfer decrease.
Key resistance ranges:
- 50-day EMA (blue)
- 1.3164 – 38.2% Fibonacci
- 20-day EMA (purple)
Key assist ranges:
- 1.3000
- Decrease channel trendline (black)
BEARISH IG CLIENT SENTIMENT
IG Shopper Sentiment Information (IGCS) reveals retail merchants are presently LONG on GBP/USD, with 73% of merchants presently holding lengthy positions (as of this writing). At DailyFX we usually take a contrarian view to crowd sentiment leading to a draw back bias.
Contact and comply with Warren on Twitter: @WVenketas
DailyFX gives foreign exchange information and technical evaluation on the traits that affect the worldwide forex markets.
