Bottom line: GBPUSD long term structure continues to remain bullish against 1.1414 lows in March 2020. Bulls manage to print yet another high around 1.2850 mark today, before pulling back. The currency might be preparing for a corrective drop towards 1.1900 levels.
Fundamental Outlook:
EURUSD raised through fresh highs around 1.1725 this morning ahead of the FOMC and Q2 GDP to be out this week. The US Dollar has faced heavy sell off against major currencies including the Japanese Yen. The EURUSD exchange rate might get further boost if the Euro Zone Q2 GDP prints better.
FTSE had dropped over -3.05 on Friday, closing around 6117 levels. The indice followed Global Equity Markets lower as risk sentiment turned negative. It might just be the beginning of a much larger selloff with COVID-19 infections still on the rise and US-China relation under stress.
GBPUSD exchange rate also increased marginally and touched 1.2850 today. The currency might come under pressure as it would be taking cues from a NO Brexit deal for now. Fisheries control remain a major hurdle, as negotiators called off talks at least for now.
Technical Analysis:
GBPUSD bulls have managed to print yet another shallow high at 1.2850 today and it remains to be seen if they are able to hold here. Ideally, a meaningful corrective drop should be underway towards 1.1900 levels, before the rally could resume.
GBPUSD has remained in control of bulls since 1.1414 lows in March 2020. It has managed to carve a series of higher highs and higher lows through 1.2850 levels today. The RSI is now reaching overbought territory on the daily chart, indicating a potential reversal soon.
Also note that fibonacci 0.618 retracement of the entire rally between 1.1414 and 1.2850 is passing through 1.1970 levels. High probability remains for a bullish reversal, if prices manage to reach there and turn GBPUSD towards 1.3500 and 1.4300, going further.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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