By: DailyForex
The GBP lost all gains made during the last session, as after the GBP/USD made a strong bullish move during Wednesday session to the resistance level at 1.3612, the highest level in 3 months, the pair collapsed rapidly after the release of the minutes of the last Federal Reserve Meeting, as they maintained the plan of 3 interest rate raise for 2018. The minutes suggested that the low inflation level in the country is transitional and that the job market strength will support facing its implications. The decision makers at the Federal Reserve agreed largely last month that the US tax reform would benefit the economy, however, they split in terms of whether the resulting growth will lead to faster rate raise this year.
We highlighted yesterday that the daily chart for this pair shows that it is overbought and it will witness a bearish corrective move anytime, especially, if there were any new signs related to BREXIT negotiations. The recent gains for this pair took advantage from the US drop, as the Dollar Index reached its lowest level since September, pressured by the drop in the US Treasuries amid fears that the passage of the US Tax Cut law will rapidly lead to a sudden raise in the inflation, and force the Federal Reserve board to increase the rates sharply in 2018.
Before the release of the minutes, there was a release of a positive industrial PMI from ISM, and an increase on the construction spending. It clear that the pair is influenced strongly and effectively by the consequences and path of the BREXIT negotiations. The negotiations entered the second stage; the Trade Relations, after an almost done deal regarding the borders with Ireland.
Technically:
The GBP/USD is in an upward corrective moves by settling above the 1.35 peak and the next resistance levels for this pair will be at 1.3635 and 1.3720. I still prefer selling the pair at each upward bounce, as the BREXIT fears are still standing and won’t be solved soon. On the bearish side, the nearest support levels for the pair are currently at 1.3445 and 1.3360, and will go down strongly in case it moved below 1.3300.
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On the economic data front:
This pair will be awaiting an important announcement of the UK Services and the net personal loans. From the US, there will be a release of the non-farm employment change from ADP, unemployment claims and the US crude inventories. The market will monitor any updates regarding the BREXIT negotiations, as well as, Trumps internal and external policies.