Unfortunately for those wishing for a happily-ever-after ending in the Greek debt drama, the clock struck midnight on the June 30 (with an extra second to spare) IMF deadline and the current bailout program. The GBP/USD pair pushed a tiny bit lower today while still consolidating between Ichimoku Cloud and the 50% Fibonacci level. Who’s gonna win the dancing battle; Ms USA or Mr.British Pound? Here are 4 points to consider when analyzing the pair’s dance moves on the forex dance floor.
The UK Manufacturing PMI came in slightly worse than expected this morning during the London session, at 51.4 vs. the 52.6 expected which was lower than last month’s 51.9/ The Brits had a worse than expected current account number which is the difference in value between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. The number came in at -26.5B versus the expected -23.7B, although it ticked up from March release which was revised to -28.9B.
This number which is released quarterly about 85 days after the quarter end, is directly linked to the currency demand. A rise in the index signals that foreign investors are buying more of the domestic currency (Mr. British Pound.)
This data had minor impact on GBP on Tuesday, pushing it down just a tiny bit.
2- USD Strength Could Push the Pair Further Down
If Ms. USA continues on her path of strength, the GBP/USD pair could eventually head back down. And what could shake up Ms. USA more than the non-farm payrolls number (NFP.) We are expecting the coolest beat on the USD dance floor a day early this month because of the 4th of July holiday here in America. So gear up for it on Thursday at 12:30 pm GMT.
If the actual reading for the ADP report meets or beats expectations and the NFP report posts an improvement over the previous read, we can expect Ms. USA to dance up and push GBP/USD down. But if the actual reading for the NFP report shows much weaker jobs growth, then there is a very good chance that the US dollar would not climb as much or perhaps even decline.
Other than this, another point to keep in mind is the Greek crisis. If the risk-off sentiment continues, we may see safe haven seekers to turn to Ms. USA, which will translate to more demand (and therefore rally) in the USD regardless of the NFP outcome.
3- GBP/USD Could be Forming a Double Top Pattern
After reaching our 50% % Fibonacci as predicted in my previous updates, the GBP/USD is now trapped between the two pivot levels on the forex dance floor with no clear technical indication on the daily chart.
From a longer-term point of view (i.e. monthly chart) the pair has a more bullish bias than bearish as it is testing the 1.5867 resistance level.
The RSI is above the neutrality area. This consolidation could also be the beginning of a Double Top forex chart pattern .
4- It’s the Ultimate Battle
As you can see my sweet fellow traders, the consolidation we are experiencing in the GBP/USD pair is pretty logical. Both Mr.British Pound and Ms. USA have been equally strong (or weak) and therefore neither have been able to push the other in any direction. The beginning of July could define new directions for each of them, so… Be patient my friends!
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