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Bears Dominating Ahead of Fed Interest Rate

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  • GBP/USD’s bearish trend resumed after US inflation rose on Friday.
  • Next week, interest rate decisions from the US and the UK could make the pair quite volatile.
  • The price is trading below the 22-SMA in the charts.

The weekly forecast for GBP/USD is bearish owing to the US inflation rise that could push the Federal Reserve to tighten its policy and push the dollar higher.

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Ups and downs of GBP/USD

Monday and Tuesday were bullish days for GBP/USD after PMI data from the UK came out higher than investors had expected. The rest of the week saw the pair closing lower for several reasons.

On Wednesday, the UK’s construction PMI and house price index came out lower than investors had expected. On Friday, the United States released positive inflation data, which saw the dollar rally against the pound.

Next week’s key events for GBP/USD

GBP/USD weekly event forecast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Next week will be a busy week for GBP/USD as there will be important news releases from the US and the UK. Investors will be paying attention to the UK’s gross domestic product data, which is expected to drop. There will also be a job report from the UK showing the employment change for March and the unemployment rate for April. Finally, the Bank of England is expected to raise interest rates by 25bps.

In the United States, investors expect the Federal Reserve to raise interest rates by 50-bps, from a previous 1% to 1.50%. The steeper-than-expected inflation in the US has fueled fears of a more aggressive approach to interest rate hikes by the Fed. Investors will therefore pay close attention to what policymakers say during the press conference.

GBP/USD weekly technical forecast: Bears targeting 1.2200 critical level

GBP/USD weekly forecast chart

Looking at the daily chart, we see the price has made a strong bearish candle that has broken below the 22-SMA. This move came after the price attempted and failed to trade above the SMA. The Bears have returned to the market after a short break with strong momentum. The RSI also trades below the 50 level, confirming the bearish bias.

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The next level for bears will be at 1.2200, which has acted as support previously. The bias will remain bearish if the price keeps trading below the 22-SMA and the RSI stays below the 50 levels.

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