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Traders looking for a sustained move higher may have too much wishful thinking in the near term.
The GBP/USD is trading near the 1.23100 ratio as of this writing, yesterday’s high for the currency pair came within sight of the 1.23400 level momentarily. However, this morning’s trading has maintained a higher level of the GBP/USD, and it is trading near values last seen on the 21st of September. The GBP/USD has been under the power of a bruising three-month bearish trend. The sudden developing weeklong bullish move upwards has likely raised the speculative intrigue of the GBP/USD for traders.
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The U.S. Fed released its FOMC Meeting Minutes report yesterday, which delivered a rather murky picture regarding the outlook for the U.S. economy. However, the paper did stress it believes the economy is doing relatively well during this period of higher interest rates. Inflation remains a catalyst for the Fed concerns, and today the Consumer Price Index numbers will be published in the U.S.
The GBP/USD has sustained its upward momentum as U.S. Treasury yields have come off highs. Financial institutions may also believe the GBP/USD has been vastly oversold in the past month and the lows warranted a buying signal.
However, dangers via economic reports still lurk. Today’s CPI inflation numbers from the U.S. should be monitored. And the GDP numbers from Great Britain proved perplexing this morning. The growth numbers from the UK met expectations for the month with a slight gain of 0.2%, but last month’s outcome for the Gross Domestic Product was revised downwards to minus -0.6%.
This revision downwards is alarming, but also puts the Bank of England in a spot in which it will likely have to remain rather dovish. Economic data revisions are becoming a problem for financial institutions that are uneasy about what to believe.
- The 1.23000 level is within clear sight for the GBP/USD, but choppy conditions may continue to be seen over the near term.
- The murky rhetoric from central banks and fears of inflation continue to create shadows in Forex.
- Today’s CPI inflation numbers from the U.S. must be watched. If they are lower than expected this could create more selling of the GBP/USD.
Traders looking for a sustained move higher may have too much wishful thinking in the near term. While the trend higher the past week is certainly alluring, traders should not be overly ambitious and have targets that do not exceed realistic upward movement. If the GBP/USD can sustain prices over the 1.22900 level in the short term and continue to challenge the 1.23000 ratio this will certainly be interesting. But a weaker CPI number from the U.S later today might be needed to provide additional fuel for the GBP/USD to penetrate yesterday’s highs.
Current Resistance: 1.23050
Current Support: 1.22950
High Target: 1.23525
Low Target: 1.22695
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