The GBP/USD touched highs on Wednesday that had last been seen in April of 2022, this as the U.S Federal Reserve confirmed its interest rate halt for the month of June.
The GBP/USD is trading near the 1.26450 level as of this writing with fast conditions flourishing. Traders should compare the value of the GBP/USD as they read this article to the actual market to gain a perspective regarding the price momentum in the currency pair. Last night after the U.S Federal Reserve said it would not increase its Federal Funds Rate the GBP/USD climbed in the aftermath, and attained a mark of nearly 1.26990. This higher value had last been seen in April of 2022.
The slight selloff of the GBP/USD this morning should have been expected by traders because the non-action of the U.S Federal Reserve was highly anticipated. Confirmation of financial institutions’ outlook certainly caused the 1.27000 level to come into focus briefly yesterday as the bullish trend in the GBP/USD mounted upwards mobility, but much of the buying power had already been priced into the GBP/USD. The currency pair was trading near the 1.23060 ratios on the 25th of May.
Yesterday’s low for the day near 1.26025 achieved solid buying action, this as the day proceeded and the Fed acted as most traders believed would happen. However, the FOMC Statement and Press Conference from the U.S. central bank delivered a rather troubling outlook. The Fed remained rather aggressive regarding their rhetoric and said another increase of the Federal Funds Rate could happen sooner rather than later, and that another increase later on in 2023 is likely to happen too. The question now is if financial institutions will believe what the Federal Reserve has spoken.
Financial houses did cause a slight selloff of the GBP/USD late last night and early this morning, but the GBP/USD remains within sight of highs. The question for day traders is if the momentum upwards of the GBP/USD is going to be sustained strongly or if incremental selling will bring the currency pair back to technical support levels.
Traders should prepare for choppy conditions in the near term as financial houses take a deep breath and make their decisions. The upwards momentum of the GBP/USD the past three weeks of trading has been significant, but the currency pair may find that it has to prove it can sustain its current values.
- Retail Sales figures will come from the U.S. today, but unless there is a major surprise financial institutions are likely not to react much to the report.
- The Bank of England will release its Official Bank Rate decision next week and an increase is expected of 0.25%.
Current Resistance: 1.26550
Current Support: 1.26310
High Target: 1.26890
Low Target: 1.26075
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