British Pound Rallies But Outlook Remains Gloomy
2022.09.12 16:01
GBP/USD starts the week by rallying to 1.1620. Due to the death of the Queen, the Bank of England postponed its meeting, and hence, the on the interest rate from Sept. 15 to Sept. 22.
Most likely, the rate will be increased at this meeting, yet the regulator has given no more comments about it.
The market is utterly skeptical about the local growth of the GBP. There are a lot of talks that the new King Charles III must see the pound be cheaper than the dollar or euro.
This will not necessarily happen this year or next, but there are increasingly more reasons for such gloomy forecasts.
The lengthy downtrend in the GBP can be reversed by serious shifts in the credit and monetary policy of the BoE and the British economy, but there are none.
GBP/USD confidently pushed off the support level of 1.1460. Currently, buyers almost have a chance to reverse the lengthy downtrend in the pair and turn it into a bullish one, or at least provoke a serious correction.
The nearest strong resistance level of the bulls is 1.1790.
A breakaway of this one will open a pathway to the following levels – 1.2020 and 1.2465. However, for now, the Ichimoku Cloud reveals a strong downtrend – prices keep pushing off the indicator’s signal lines.
The first sign of a possible trend reversal will be a breakaway of the lower line of the Cloud at 1.2700, and the uptrend will start developing fully with a breakaway of 1.2900.
In the H4 chart, the pair has escaped the medium-term descending channel.
Now it is testing the upper border of the Ichimoku Cloud. If the pair breaks through it and secures above 1.1695, this will indicate the development of a bullish impulse.
However, a test of the broken border of the bearish channel before further growth is not excluded. The goal is 1.1865.
A pessimistic scenario for buyers might develop if the quotes fall below 1.1455, which will mean the descending impulse is back.
This scenario will speed up the breakaway of a critical support level of 1.1460, which will mean the pair risks falling even lower in the long run.
Disclaimer: Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
