The Pound Sterling has registered an upward trend according to a convergence of technical indicators. However, the possibility of a consolidation or correction cannot be discounted, given the recent release of The Claimant Count data, which indicates an increase in the number of individuals receiving unemployment benefits from 8,900 to 50400. Additionally, the presence of a negative divergence signals a potential pause in the upward trajectory.
Overview
The Pound Sterling has registered an upward trend according to a convergence of technical indicators. However, the possibility of a consolidation or correction cannot be discounted, given the recent release of The Claimant Count data, which indicates an increase in the number of individuals receiving unemployment benefits from 8,900 to 50400. Additionally, the presence of a negative divergence signals a potential pause in the upward trajectory.
High Impact Economic Events
Tuesday 06:00 am (GMT+0): Claimant Count Change (GBP)
Wednesday 06:00 am (GMT+0): GDP m/m (GBP)
Wednesday 12:30 pm (GMT+0): Core CPI m/m (USD)
Wednesday 12:30 pm (GMT+0): CPI m/m(USD)
Wednesday 12:30 pm (GMT+0): CPI y/y (USD)
Wednesday 06:00 pm (GMT+0): Federal Funds Rate (USD)
Wednesday 06:00 pm (GMT+0): FOMC Economic Projections (USD)
Wednesday 06:00 pm (GMT+0): FOMC Statement (USD)
Wednesday 06:30 pm (GMT+0): FOMC Press Conference (USD)
Thursday 01:30 am (GMT+0): FOMC Press Conference (AUD)
Thursday 01:30 am (GMT+0): FOMC Unemployment Rate (AUD)
Thursday 12:30 pm (GMT+0): Core PPI m/m (USD)
Thursday 12:30 pm (GMT+0): PPI m/m (USD)
Thursday 12:30 pm (GMT+0): Unemployment Claim (USD)
Friday Tentative: BOJ Policy Rate (JPY)
Friday Tentative: Monetary Policy Statement(JPY)
Friday 02:00 pm (GMT+0): Prelim UoM Consumer Sentiment (USD)
Technical Analysis
The GBPUSD has been trending upward since it bounced back from the support area at 1.22994. The beginning of the buying pressure was indicated by a white Marubozu candlestick, which pushed the exchange rate above the 50-period Exponential Moving Average (EMA), creating a bullish reversal pattern called a failure swing in technical analysis. Specifically, prices formed a low point at 1.24457, which did not drop lower than the previous low, and rose above the high at 1.26344, hence a failure swing. Both the 50-period EMA and the Momentum oscillator confirm the bullish sentiment for the Pound Sterling. Prices are above the EMA, and the Momentum oscillator shows values above the 100 baseline. Upon closer inspection, a negative divergence suggests a potential pause in the uptrend and the likelihood of a consolidation phase.
Potential Upside Targets
If the bulls manage to maintain control of the GBPUSD market, traders may consider the following three potential upside targets:
1.28176: The initial upside target is 1.28176, aligning with the peak marked on June 6.
1.29466: The second price objective is 1.29466, representing the 261.8 percent Fibonacci Extension drawn from the peak of the failure swing 1.26344 down to the trough of 1.24457.
1.30096 The second upside target is 1.30096, representing the 261.8 percent Fibonacci Extension drawn from the swing high of 1.28006 to the swing low of 1.26808.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following three downside targets:
1.26344 The initial support level is 1.26344, corresponding to the peak of the failure swing marked on May 3.
1.24457 The second price objective is 1.24457, aligning with the trough of the failure swing, which was marked on May 9.
1.22994: The third potential downside target is estimated at 1.22994, representing the trough marked on April 22.
Conclusion
The GBPUSD has been rising since bouncing back from the lows reached in 1.22944. However, the recent rise in the Claimant Count, along with a negative divergence between the price and the Momentum oscillator, suggests that the upward trend may pause. Traders should keep a close watch on this currency pair, especially considering the upcoming release of important economic data, such as tomorrow's Consumer Price Index, which could affect currency values.