There has been massive chaos in the financial market from the very beginning of the year 2017 as no investors are sure regarding the next movement of the green bucks in the global market. Prior to the closing of the year, FED chairperson Janet Yellen has stated that they are going to hike their interest rate for at least three times in the year 2017 and already six months have passed and we have seen only one rate hike from the US government.
GBP exhibited a strong bullish movement in the global market by utilising the delay of rate hike decision by Fed. Currently, the GBPUSD pair has recovered a significant amount of loss after the Brexit event and now heading the towards the critical resistance level at 1.3040 which is also the high of 18th May 2017.
Investor’s sentiment
The greenback gained a significant amount of strength prior to the closing of the year 2016 as US hike their interest rate on the basis of 25 points in the global market. During that event, the U.S dollar index surged up to a 14 years record high, a level which is not seen since 2003.However, the market absorbed most of the bullish strength of the greenback at the very beginning of the year 2017 due to strong negative US consumer sentiment. The consumers were told by the U.S administration that there will be a delay in the increment of fiscal spending policy and this push the U.S dollar lower against most of its major rivals in the global market.
Most of the professional traders made a decent profit by riding the medium term bullish rally in the GBPUSD pair and currently they have already booked their profit as the pair is trading near the critical resistance level at 1.3040.Most of the professional investors are cautiously waiting for bearish price action confirmation signal to short the GBPUSD pair to make a decent profit in the market.
Economic conditions
Compared to the US economic performance the UK economy is doing relatively well and most of the expert investors in the forex trading industry made a decent profit by selling the dollar. However, the selling pressure has ceased to a great extent as the upcoming week is going to play a major role of the GBPUSD pair. If Fed chairperson Janet Yellen hikes their interest rate in the next FOMC meeting then we will see a strong drop in the GBPUSD pair in the upcoming days. However a delay in the rate hike decision will push the pair higher which will ultimately target the key resistance level at 1.3400 level but prior to that, it must overcome the high of 18th may 2017.
Sterling gained the strongest bullish momentum of the week after the release of the strong Halifax HPI data which shows a strong positive gain of 0.4% whereas the forecast was -.0.2%.Though the pair is trending higher most of the investors are waiting on the sideline due to the uncertainty of UK election. Most of the professional investors in the global market are currently waiting on the sideline to trade the market after the dust settles down.
Summary
Trading the financial market has become extremely complex as most of the high impact news are currently in the pending state. Pound investors are currently waiting on the sideline on the eve of the election as no is clear about the possible outcome of this election. On the contrary, the pending US interest rate hike decision is also fueling up the confusion in the market.