GBP/USD: up currently being capped

FXStreet – The currency pair GBP/USD failed again at the psychologically important 1.30 mark, and marked in early American business, a new daily low at 1,2944. Most recently it was listed on 1,2951 and, therefore, 0.22 per cent in the Minus.

The persistent buying interest around the US Dollar, which is backed by rising expectations of interest rate hikes, was the driving force behind today’s downward movement in this currency pair. Released on Friday, the US labour market data revealed a slowdown of wage growth in April, which was not sufficient, however, to the market and dampen expectations for a June interest rate increase, and so the bull remains of sentiment around the US Dollar intact.

In addition, the American currency is favored by a lower risk appetite of investors, which is the negative sentiment around the European stock markets and a decline in US bond yields reflected.

The dovish comments of the Fed chief of St. Louis, James Bullard, have been ignored by the market. He advocated that the Fed Funds Target should Range to remain unchanged in a range between 0.75 and 1.00% until there is more evidence that the economy shifts into a higher gear.

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Fed’s Bullard: policy rate is currently at a attached to level
Fed’s Mester: labour market objectives are achieved; approaching the inflation target of 2%
GBP/USD bullish closing above 1.3000

Technical Outlook

Malte Kaub, chief market analyst at Activ trades, said that the currency rose pair GBP/USD for the last part, and from a reverse shoulder-head-shoulder-Formation textbook erupted.

“On the way to the exploitation of the existing rate potential, which is derived from the o. g. classic reversal formation, the 38.2% Fibonacci Retracement of the fall in the Price of 24. June 2016, the only really serious obstacle. The rate is to locate a destination from the above-mentioned lower reversal around 1,3380. In the long term, the chart would only be able to do with a crack over the overall downtrend, and the 50% Fibonacci level (1,3455) and the Gapoberkante around 1,3665 lighten“.

** FXStreet News Editorial, FXStreet**

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