The US Federal Reserve’s monetary policy statement came and went with barely a ripple in financial markets.
Market pricing still hovers around a 50:50 chance of a Fed rate hike by December. Today’s first look at the June quarter GDP number may provide some action in the USD but only if the 2.6%-2.4% year on year expectation misses.
In contrast, a rate cut from the Bank of England (and perhaps other easing measures) now looks to be a done deal next Thursday and GBPUSD traders are positioning themselves for what will certainly be a market moving announcement.
Management and risk description
Since the Brexit carnage, Sterling is still attempting to form a 4-Week Inverse Head and Shoulders reversal (refer daily chart below).
GBPUSD is showing a sustained break above this resistance (currently situated at 1.3440) will establish an upside projection toward the 1.4140 level, which also approximates a Fibonacci 61.8% retracement of Sterling’s entire 1.5020 – 1.2800 decline (see daily chart below).
The decline from last week’s 1.3480 peak assumed the form of a complex corrective “Double Three” Elliott Wave structure, which ended yesterday at 1.3060.
Entry: Today, any reaction to 1.3190/1.3160 would present a buying opportunity.
Stop: 1.3129, initially.
Target: Leaving open for now to give daily reversal structure every chance to complete.
Time horizon: Allow several weeks to develop.
GBPUSD Daily chart (click to expand)
Chart: GBPUSD weekly chart (click to expand)
Source: Both charts, ThomsonReuters
— Edited by Adam Courtenay
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