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Other important companies that published weak results were UPS, 3M, and Verizon. UPS is often seen as an indicator of the American economy because of the delivery it does for e-commerce companies.
- Sell the GBP/USD pair and set a take-profit at 1.2300.
- Add a stop-loss at 1.2500.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2435 and a take-profit at 1.2550.
- Add a stop-loss at 1.2350.
The GBP/USD pulled back as investors embraced a risk-off sentiment after the relatively strong US housing data and weak corporate earnings. The pair retreated to a low of 1.2400, which was much lower than this month’s high of 1.2540.
Investors have embraced a risk-off sentiment following the relatively weak financial results by some of the biggest companies in the US. The most closely watched company was First Republic Bank, which is seen as the riskiest bank in the country.
In its report, the firm said that it lost hundreds of billions of deposits after the SVB and Signature Bank implosion. The company is at risk because of the nature of its customers, who are affluent and have more than $250k in their accounts.
Other important companies that published weak results were UPS, 3M, and Verizon. UPS is often seen as an indicator of the American economy because of the delivery it does for e-commerce companies. The firm’s profits declined in the first quarter. The same was true for 3M and Verizon.
Meanwhile, consumer confidence dropped to the lowest level in seven months. This sent worries that consumer spending will drop in the coming months, which will hit the country’s GDP. Consumer confidence is the biggest contributor to the country’s economy.
On the positive side, the housing sector is showing signs of bottoming. The Case-Shiller home price index rose in February after falling in the past seven straight months. New home sales jumped by 9.6% to 683k in March while building permits dropped at a slower pace than expected. It dropped by 7.7% to 1.43 million in March.
Therefore, analysts still believe that the Federal Reserve will hike interest rates by 0.25% in May and then take a strategic pause.
The GBP/USD pair rose to a high of 1.2506 on Tuesday and then quickly retreated. It managed to move below the 25-period and 50-period moving averages. It has also formed what looks like a head and shoulders pattern, which is usually a bearish sign. The neckline of this pattern is at the support at 1.2380.
The pair will likely continue falling on Wednesday as sellers target the psychological level at 1.2300. The stop-loss of this trade will be at the right shoulder point at 1.2500.
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