Downward Pressure On GBPUSD

Andreas Thalassinos
Andreas Thalassinos

15.3.2024

The recent upswing of the Pound Sterling appears to have halted, albeit temporarily, following its peak at the exchange rate of 1.28936, which may be attributed to the release of stronger-than-anticipated inflation US data, the strengthening of the US Dollar Index, and the Federal Reserve's hawkish stance. Further analysis and staying informed about economic events and geopolitical developments will be essential in making informed trading decisions in the GBPUSD market.

Overview

The recent upswing of the Pound Sterling appears to have halted, albeit temporarily, following its peak at the exchange rate of 1.28936, which may be attributed to the release of stronger-than-anticipated inflation US data, the strengthening of the US Dollar Index, and the Federal Reserve's hawkish stance. Further analysis and staying informed about economic events and geopolitical developments will be essential in making informed trading decisions in the GBPUSD market.

Upcoming Economic Events

Monday 02:30 am (GMT): Industrial Production y/y (CNY)
Tuesday Tentative: Monetary Policy Statement (JPY)
Tuesday 03:30 am (GMT): Cash Rate (AUD)
Tuesday 12:30 pm (GMT): Consumer Price Index (CAD)
Wednesday 07:00 am (GMT): CPI y/y (GBP)
Wednesday 06:00 pm (GMT): Federal Funds Rate (USD)
Thursday 12:30 am (GMT): Unemployment Rate (AUD)
Thursday 08:15 am (GMT): French Flash PMI (EUR)
Thursday 08:30 am (GMT): SNB Policy Rate (CHF)
Thursday 09:30 am (GMT): Flash PMI (GBP)
Thursday 12:00 pm (GMT):  Official Bank Rate (GBP)
Thursday 12:30 pm (GMT):  Unemployment Claims (USD)
Thursday 01:45 pm (GMT): Flash PMI (USD)
Friday  07:00 am (GMT): Retail Sales m/m (GBP)

Technical Analysis

On March 3, the GBPUSD exchange rate reached the high price of 1.28936. However, the formation of an Evening Star pattern on the price chart signaled a potential reversal in the trend, putting downward pressure on the currency pair. Furthermore, inflationary pressures in the US economy and a hawkish stance from the US Federal Reserve may potentially strengthen the US Dollar Index, causing more selling pressure on the GBPUSD currency pair. However, the 50-period Moving average and the Momentum oscillator do not agree with the bearish scenario. If this trend continues, it could lead to a further decline in the exchange rate, making it less favorable for bullish investors and traders.

Downside Potential Targets

1.27059: The first potential target is seen at 1.27059, representing the 50% retracement of the recent rally from the trough of 1.25181 to the peak at 1.28936.
1.26615: The second target corresponds to the 61.8% Fibonacci retracement of the recent upswing.
1.25997: The following support level is estimated at 1.25997, which represents the trough marked on March 1.
1.25495: The fourth price objective is calculated at 1.25495, aligning with the second support level of the weekly Pivot Point Standard methodology.

Conclusion and Considerations

The Pound Sterling is currently under downward pressure, pushing the exchange rate to lower levels amid stronger-than-anticipated US inflation data. The current downward trajectory suggests that GBPUSD rates may decline even further. To navigate this volatile market, traders must stay informed about market sentiment, economic events, and geopolitical changes.

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Andreas Thalassinos
Andreas Thalassinos

Andreas Thalassinos is a recognized authority in the financial markets and world renowned for his expertise in algorithmic trading. He is a Certified Technical Analyst and highly respected lecturer in the education of traders, investors, and financial markets professionals. Thalassinos has played a key role in the development of education within the industry, training tens of thousands of traders of all skill levels. Traders value his seminars and workshops for the rich content, his passionate, charismatic, and lively presentations.