Home Daily Analysis GBP/USD Technical Analysis: March 07, 2019

GBP/USD Technical Analysis: March 07, 2019

There is no solution yet to the Irish border issue and the GBP/USD is pressured currently by Brexit-related headlines. Theresa May said that a no-deal Brexit would be a serious threat to the United Kingdom and this will certainly have a negative influence on the economy in Eurozone. The EU exit is the biggest economic risk the UK central bank faces currently and it is important to say that the Bank of England cut its growth forecast for the 2019 year amid Brexit uncertainty. The BOE’s Governor Carney spoke recently about higher rates in the years ahead and he warned that Brexit uncertainty could delay the process. Carney warned that the market should not prepare for further rate hikes, either for rate cuts. The US economy is still doing good in terms of growth but some Fed members warned that economic growth in the US could slow this year. The US policymakers think that the Fed must be patient about further policy firming and the rates could go in “either direction” in the upcoming period. The pair needs to fall below 1.3100 level to extend moves lower and according to the current market sentiment, the direction for GBP/USD remains „neutral – to – bearish“.

Technical analysis

The GBP/USD pair has weakened this week below 1.3200 level and the pair is trading currently around 1.3170. The UK has the slowest growth since the financial crisis but any positive news about Brexit would offer fresh support to the Pound. Trade talks between the US and China are also one of the main events for the investors currently because risk aversion took over the financial again. Trade talks between the US and China will continue but the policymakers from both countries agreed that significant progress has been made. On this chart, I marked support and resistance levels – 1.3200 and 1.3300 represent the current resistance levels, 1.3100 and 1.3000 represent the current support levels.

Recommendation: The Brexit uncertainty still affects negatively on the market and the market still has its doubts about the final outcome of Brexit. Every bad news that is connected with Brexit will likely result in some demand for the US dollar and this will have a negative influence on GBP/USD. If the price falls below 1.3100 that could be a very good opportunity for the short- term traders, short-term traders can put the stop loss at 1.3115 and take profit at 1.3060 or below. If the price jumps above 1.3200 it would probably reach the 1.3230 level very soon, the next target could be located around 1.3250.

 

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