The Great British Pound has been significantly rallying higher in the global market after hitting the critical support level at 1.27704.
After the Brexit collapse, the GBP/USD pair has participated nicely in the medium term bullish trend and most of the leading investors in the United Kingdom made a decent profit by riding the medium term bullish trend in the market.
On 18th April 2017, the GBP/USD pair cleared the major critical resistance level at 1.27704 and is now looking to make another ascending wave in the daily chart. Despite the bullish recovery attempt, most investors are currently waiting on the sideline as the mighty US dollar is still holding its ground to a certain extent. The experts are currently eyeing on the Fed rate hike decision and if Fed chairperson Janet Yellen manages to come up with a hawking hike in June FOMC meeting minutes then we will see a decent slide in the GBP/USD pair.
Let’s do the technical analysis of GBP/USD pair
Figure: Technical analysis of daily chart, GBP/USD pair
From the above figure, you can clearly see that the pair has been forming nice higher high associated with higher lows in the daily time frame which is a classic example of a bullish trend in the market. Technically the pair is under bearish pressure and most likely to test the low of first June at 1.27690. A clear break of this minor support level will bring some fresh selling pressure in the market which will ultimately lead the pair towards the 38.2 percent Fibonacci retracement level drawn from the low of 14th March to the high of 19th May. The professional traders will cautiously look for bullish price action signal in their trading platform to execute long orders in the market. Currently, the pair is trading above a bunch of strong resistance levels which is a good indication of bullish continuation pattern in the market. However, if the daily closing of the price below the 61.8 percent retracement level will bring the Bears back in action and we will see another sharp fall in the price.
Fundamental analysis
The current economic performance of the U.S economy is relatively weak and most of the leading investors are now waiting for the June FOMC meeting. Due to the projected three rate hikes from Fed chairperson Janet Yellen, the optimistic dollar bulls are still hoping a strong turnaround from the mighty green bucks. If the Fed fails to come up with a hawking hike in the upcoming FOMC meeting minutes then we will see a strong bullish rally in the GBP/USD pair in near future.
On Thursday the US unemployment claims might give a slight hint to the investors’ community regarding the rate hike decision by the Fed. A significant improvement in the data will increase the chance of rate hike by FED to a great extent. On Friday we have manufacturing production for the UK and strong positive data will fuel up the cable buyers in the market. The recent slide of the U.S dollar index is also going to give a strong support for the GBP/USD buyers for the upcoming days. Currently, the US dollar index is heading towards it next critical support level at 95.95 level and a clear break of that critical support level will confirm the bullish rally of the GBP/USD pair.
Summary
The mighty greenback has been suffering from an extensive loss in the global market from the very beginning of 2017. Despite the bearish pressure, the optimistic dollar bulls are still hoping for strong turnaround from the green bucks due to the pending rate hike decision by Fed. Since the GBP/USD pair has plenty of support underneath its current trading level we will cautiously wait for bullish price action confirmation signal to execute long orders in the market.