The pound fell to $1.27 from a 14-month high of $1.2848 on June 16. This is due to the growing concern of investors about the possibility of a recession after a significant increase in interest rates by the Bank of England. The latest PMI survey showed a sharp slowdown in UK business growth in June, driven by a slowdown in the services sector, a stronger downturn in manufacturing and continued inflationary pressures. The Office for National Statistics (ONS) also reported an unexpected rise in UK retail sales in May, while domestic consumer sentiment was less pessimistic in June. On Thursday, British policymakers implemented their 13th consecutive hike in interest rates and expressed readiness for further tightening after data showed persistently high inflation in May. Investors currently expect the prime interest rate to peak at 6.1% by February 2024.
GBP/USD Weekly Forecast June 26 — 30, 2023
The currency pair Pound/Dollar GBP/USD completes the trading week as part of the development of an aggressive rise and the continuation of the formation of the “Wedge” reversal pattern with the aim of working out at the level of 1.1705. Moving averages indicate a bullish trend. Prices have broken through the area between the signal lines up, which indicates pressure from buyers and a potential continuation of the growth of the British Pound against the US Dollar already from current levels. At this point, we should expect an attempt to develop a rise and test the resistance area near the level of 1.2965. Further, a rebound down and the continuation of the fall of the Pound Dollar quotes to the area below the level of 1.1645.
An additional signal in favor of the decline of the British Pound will be a test of the resistance line on the relative strength index (RSI). The second signal will be a rebound from the upper boundary of the bearish Wedge pattern. Cancellation of the option to fall the GBP/USD pair in the current trading week June 26 — 30, 2023 will be a strong growth in quotes and a breakdown of the 1.3135 area. This will indicate a breakdown of the resistance area and continued growth to the area above the level of 1.3455. The fall of the currency GBP/USD will be confirmed by a breakdown of the support area and closing of the price below the level of 1.2255, which will indicate a breakdown of the lower border of the “Wedge” reversal pattern.
Among the important news from the UK that may have an impact on the Pound/Dollar rate, it is worth highlighting: Speech by Bank of England (BoE) Governor Bailey Speech, United Kingdom Gross Domestic Product (GDP) q/q.
GBP/USD Weekly Forecast June 26 — 30, 2023 suggests an attempt to rise and test the resistance level near the area of 1.2965. Where should we expect the currency pair to continue falling with the target below the area of 1.1645. An additional signal in favor of the decline will be a test of the trend line on the relative strength index (RSI). Cancellation of the fall option for the Pound/Dollar pair will be a strong growth and a breakdown of the level of 1.3135. In this case, we should expect the pair to continue to rise with a potential target above the level of 1.3455.
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