Investment Tips 23-05-2023 15:28 37 Views

GBP to USD Forex Signal: Bearish Breakdown Towards 1.2238

EURGBP USDGBP chart analysis

GBP to USD Forex Signal: Bearish Breakdown Towards 1.2238

The GBP to USD currency pair is heading toward a potential bearish breakdown. Meanwhile, traders await key statements and economic data from both the UK and the US. The recent talks between US President Joe Biden and Speaker Kevin McCarthy on the debt limit issue added to the pair’s cautious sentiment.

With the exchange rate currently hovering around 1.2432, market participants are closely monitoring upcoming economic indicators and official remarks.

Economic Data and Debt Limit Talks Shape Market Sentiment

As the countdown to June 1 continues, the GBP/USD forecast remains relatively calm in the forex market. However, Janet Yellen, the head of the US Treasury, has raised concerns regarding the potential consequences of failing to pass the debt limit deal in Congress. While President Biden and Speaker McCarthy met on Monday and committed to avoiding default, significant divisions between the two parties persist. The ongoing negotiations are expected to impact market volatility.

Traders are eagerly awaiting the release of flash manufacturing. Moreover, services Purchasing Managers’ Index (PMI) numbers by S&P Global for both the UK and the US will shed light on the current state of the respective economies. At the moment, market expectations are leaning toward continued outperformance of the services sector in relation to the GBP/USD forecast.

Crucial Economic Events and Statements Awaited

In addition, market attention will be directed towards a statement by Andrew Bailey, the head of the Bank of England (BoE). Bailey’s remarks on the British economy and insights into upcoming meetings could influence the GBP to USD pair’s trajectory, including the exchange rate of 100 GBP to USD. Notably, the BoE recently implemented a 0.25% interest rate hike.

Across the Atlantic, the US statistics agency will publish the latest data on new home sales, while Federal Reserve official Lorie Logan is scheduled to deliver a speech. Logan’s support for smaller and less frequent rate hikes, expressed in a statement last week, has attracted attention.

GBP to USD Technical Analysis Points to a Bearish Outlook

From a technical standpoint, the GBP/USD pair has been experiencing a bearish trend since reaching a peak of 1.2675 on May 11. It has slipped below the 23.6% Fibonacci Retracement level and moved beneath the 50-period exponential moving average. Of significance, the pair has also breached the lower boundary of the ascending channel illustrated in purple. The MACD indicator signals a bearish bias.

Given these technical indications, it is likely that the pair will continue its downward trajectory. Sellers are eyeing the 50% retracement level at 1.2238, affecting the exchange rate of 100 GBP to USD. Traders implementing a bearish strategy should consider setting a stop-loss at 1.2525.

GBP to USD: Bullish Perspective Presents Alternative Scenario

Alternatively, a bullish view may emerge if the pair surpasses the buy-stop level at 1.2485, accompanied by a take-profit target of 1.2550. In this scenario, it is advisable to place a stop-loss at 1.2385.

Looking ahead, market participants will closely monitor developments in Washington. Besides, the economic data releases and central bank statements will provide clarity to the market. The upcoming forex announcement will ensure further guidance on the GBP/USD pair’s trajectory.

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