Daily Analysis For GBP/USD  22-05-2023

Daily Analysis For GBP/USD 22-05-2023

GBP/USD Analysis
Economic Events and Scenario for GBP/USD
Economic Events: -
00:50(Japan) Machinery Orders YoYMediumJPY
00:50(Japan) Machinery Orders MoMMediumJPY
01:00(Canada) Victoria DayNoneCAD
01:00(Montenegro) Independence DayNoneEUR
02:15(China) Loan Prime Rate 1YMediumCNY
02:15(China) Loan Prime Rate 5YMediumCNY
05:30(Netherlands) Consumer ConfidenceMediumEUR
06:00(Estonia) PPI YoYLowEUR
06:00(Estonia) PPI MoMLowEUR
07:30(Switzerland) Industrial Production YoYMediumCHF
08:00(Slovakia) Current AccountLowEUR
09:00(Greece) Current AccountLowEUR
09:00(Australia) Myfxbook AUDUSD SentimentMediumAUD
09:00(Switzerland) Myfxbook USDCHF SentimentMediumCHF
09:00(Japan) Myfxbook USDJPY SentimentMediumJPY
09:00(European Union) Myfxbook EURUSD SentimentMediumEUR
09:00(United Kingdom) Myfxbook GBPUSD SentimentMediumGBP
09:00(Canada) Myfxbook USDCAD SentimentMediumCAD
09:00(New Zealand) Myfxbook NZDUSD SentimentMediumNZD
10:00(Belgium) Consumer ConfidenceLowEUR
10:00(Euro Area) Construction Output YoYLowEUR
10:45(European Union) EU Bond AuctionLowEUR
11:00(Ireland) Wholesale Prices MoMLowEUR
11:00(Ireland) Wholesale Prices YoYLowEUR
11:00(Luxembourg) Unemployment RateLowEUR
11:30(Portugal) Current AccountLowEUR
13:00(Kosovo) Balance of TradeLowEUR
13:30(United States) Fed Bullard SpeechMediumUSD
14:00(France) 3-Month BTF AuctionLowEUR
14:00(France) 12-Month BTF AuctionLowEUR
14:00(France) 6-Month BTF AuctionLowEUR
15:00(Euro Area) Consumer ConfidenceMediumEUR
15:50(United States) Fed Barkin SpeechMediumUSD
15:50(United States) Fed Bostic SpeechMediumUSD
16:30(United States) 3-Month Bill AuctionLowUSD
16:30(United States) 6-Month Bill AuctionLowUSD
20:00(El Salvador) Balance of TradeLowUSD

Today's Scenario: - The GBP/USD pair is currently trading above 1.2450 following a recovery and shows potential for further gains. This is driven by the Federal Reserve (Fed) considering a pause in their tightening of monetary policy due to tight credit conditions among US regional banks. Concerns of a potential default by the US Treasury have caused the US Dollar Index (DXY) to hover near its daily low around 103.00.
While S&P 500 futures have managed to recover some of the losses seen in early Asian trading, caution still prevails in the market. US equities ended the week in negative territory as President Joe Biden rejected partisan terms proposed by House of Representatives Kevin McCarthy, who had linked approval for raising the US debt ceiling to specific conditions.

Buy Scenario: - On the buying side of GBP/USD, a recovery above the May 9 high at 1.2640 would propel the currency pair towards the round-level resistance at 1.2700 and the high of April 26, 2022, at 1.2772. Till we do not advise to buy GBP/USD.

Sell Scenario: - GBP/USD experienced a significant drop after breaking below the upward-sloping trendline originating from the April 3 low at 1.2275 on the four-hour chart. The currency pair has been consistently forming lower highs, indicating the strength of the US Dollar bulls. Potential support is expected around the April 10 low at 1.2344.
The 50-period Exponential Moving Average (EMA) at 1.2486 is acting as a barrier for GBP/USD buyers, limiting their ability to push the price higher.
Meanwhile, the Relative Strength Index (RSI) (14) has not comfortably entered the bearish range of 20.00-40.00. If this occurs, it would further strengthen the US Dollar bulls.
If the pair declines below the May 19 low at 1.2390, it would provide additional strength to the US Dollar bulls and potentially drive GBP/USD towards the April 10 low at 1.2344, followed by the April 3 low at 1.2275. Till then we do not advise selling GBP/USD.

Support and Resistance Level: -
S1 1.2398-R1 1.2490
S2 1.2349-R2 1.2533
S3 1.2306-R3 1.2582


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