Bottom line: GBPUSD long term structure continues to remain bullish against 1.1414 lows since March 2020. Bulls might have carved an intermediary top just above 1.2800 mark and GBPUSD might correct further towards 1.2000 levels before resuming rally.
Fundamental Outlook:
EURUSD exchange rate has dropped from 1.1422 towards 1.1167 in June so far and might continue to feel the pressure over the next month as well. As COVID-19 infections continue to rise in the US and Asia, Global Equity Markets are facing another selloff. The safe haven US Dollar is set to gain against EURO, GBP and AUD if risk aversion continues.
GBPUSD exchange rate trades below the 1.2400 mark as we prepare to publish this article. As Brexit deadline for transition approaches (June 30, 2020), GBPUSD might come under renewed pressure, this week. The exchange rate might continue to drop further and settle below 1.2000 levels in the near term.
FTSE had dropped over -1.5% over the last week, closing around 6157. The indice would be taking cues from Brexit developments along with its peers Dow Jones, SPX500 and DAX over the week. It remains to be seen if UK Prime Minister Boris Johnson would ask for an extension for Brexit transition tomorrow.
Technical Analysis:
GBPUSD bulls have remained in control since printing 1.1414 lows in March 2020. They have managed to carve a series of higher lows and higher highs until recent highs at 1.2813. GBPUSD might be underway to produce a corrective drop towards 1.2000 levels before resuming higher again.
GBPUSD is facing short term resistance around 1.2650/1.2700 mark and would be interesting to see how price reacts if manages to reach there. A continues push through 1.2800 levels would be seen as constructive for bulls though.
Most traders might be preparing to take some profits off the table around 1.2650/1.2700 levels. They would allow prices to drop until 1.2000 mark before initiating fresh long positions. Short term outlook might remain bearish against 1.2800 mark.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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