Over the past week, the GBPUSD pair has traded in a sideways channel in a “swing” mode. The side channel is not clear and, as such, there is no trend or correction in sight. Excitingly, this “flat” started when the pair almost reached its highest levels since 2018, missing the mark by just 7 pips.To get more news about WikiFX, you can visit wikifx.com official website.
Ordinarily, analysts expected a downward correction on the pair for the past two weeks. However, since the bears are quite weak on the GBPUSD pair, this correction has not come into play. Thus, the same conclusions that can be reached for the EURUSD pair can be made for the GBPUSD pair (bullish consolidation). Global fundamental factors are still at work and continue to hamper the growth of the greenback. In addition, there is the global technical factor, which indicates that both the GBP and EUR have just recently ended global downward trends. Thus, presumably , we may be witnessing the beginning of a protracted global uptrend, which may last a very long time.
The US Dollar is strongly supported by very significant statistics — for example its macroeconomic background — as well as the absence of negative fundamental news across the country. The British Pound on the other hand faces a tricky future as the UK currently faces questions over its economy, with Brexit, the Northern Irish conflict, and the Scottish referendum threatening.
However, the macroeconomic background in the United States causes only a local impact on the dollar and as a result, the pair, and the fundamental background does not interest traders. Thus, it turns out that those factors that would support the dollar are practically ignored by the market entirely. On the other hand, the “speculative factor” continues to work, which further reduces the probability of a fall in the British currency.
Trading plan for the week of May 31 – June 4:
1) The GBPUSD pair continues to be in an upward trend, which kicked off about two months back. Thus, buy orders on the 24-hour time frame remain advisable. In spite of the current flat, the nearest targets are the previous local high of 1.4240 and the resistance level of 1.4332. Given that global factors are now supporting the British Pound, it is unlikely that the pair will be in a downtrend in the near future. In any case, until the price is fixed below the critical line, there is no point in talking about a downward movement.
2) Sellers still do not have enough strength to start forming a downward trend. They do not have enough strength even for a tangible correction. Thus, if the price is fixed below the critical line, only then will it be possible to talk about downward movement.