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The GBP/USD pair has been in a downward trend in the past few weeks as concerns about the American debt ceiling continued.
- Sell the GBP/USD pair and set a take-profit at 1.2390.
- Add a stop-loss at 1.2500.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2500 and a take-profit at 1.2600.
- Add a stop-loss at 1.2400.
The GBP/USD pair rose slightly as the market watched the deliberations on the debt ceiling and the upcoming Federal Reserve minutes. After slipping to a multi-week low of 1.2390 on Friday, the pair pared back some of those losses to 1.2446. It has dropped by almost 2% from the highest level this month.
The GBP/USD pair has been in a downward trend in the past few weeks as concerns about the American debt ceiling continued. Last week, talks between Democrats and Republicans ended without a deal. And with the two sides having headline positions, there is a likelihood that they will also end this week without any agreement.
Therefore, the pair will react to the upcoming talks between Joe Biden and Kevin McCarthy, the House Speaker. The two will meet today and possibly reiterate that the US will not default on June 1 when it will run out of cash.
There will be no economic data from the US and the UK on Monday. Therefore, the focus will be on statements by Federal Reserve officials. Raphael Bostic of Atlanta Fed will talk today. In his recent speeches, Bostic has supported pausing in June as the bank observes the impact of the recent rate hikes. Last week, he also ruled out that the Fed will cut interest rates this year.
Richmond Fed’s Thomas Barkin will also speak. He has been a more hawkish Fed official despite the recent slowdown of the American economy. In his statement last week, he said that he still saw the need for more hikes if high inflation persisted.
The two statements will come a day after Neel Kashkari of Minneapolis said that he supported pausing rates in the next meeting.
The GBP/USD pair has been in a bearish trend in the past few days. Last week, it managed to move below the ascending trendline that connects the lowest levels since April 3rd. The pair remains below this trendline and the 25-period and 50-period moving averages. It has also formed a descending channel shown in purple.
Therefore, the pair will likely continue falling on Monday as sellers target the next key support level at 1.2385, the lowest point last week. A move above last Friday’s high of 1.2485 will invalidate the bearish view.
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