The GBPUSD closed last week above 1.6500 indicating that its breakout to 18-month highs at 1.6600 is legitimately bullish.
The GBPUSD daily chart shows the breakout rally had no retracement. Therefore, I do expect the pair to retrace to 1.6400 before heading higher towards 1.6750. Only a daily close above 1.6575 after Monday’s trading session will change this short-term bias. That did not happen today.
Instead, cable dropped below 1.6500. Since the pair managed to hold above this level last week after breaking above it, this was a signal of weakness. This signal panned out as the pair dropped to an intraday low of 1.6466. Though price has sinced bounced back to 1.6500, price remains below the 1.6500 large quarter point signaling that more weakness could be in store for the GBPUSD.
Price targets 1.6450, 1.6430, 1.6380 to the downside and 1.6550, 1.6600, and 1.6625 to the upside.
This week all eyes will be on the FOMC. On Wednesday we will hear from the Federal Reserve as they will announce their decision on interest rates and US monetary policy. On the same day, we will get UK Q1 GDP and consumer confidence. Thursday is US GDP. The market will compare the health of both economics and we should see it played out in price. If the FOMC and US GDP are both optimistic or hawkish, expect further declines to be supported into 1.6380. However, if the Fed disappoints or UK GDP surprises to the upside, price will return to the 1.6600 highs.
Trade what you see!
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fmfx posted this
