Daily Analysis For GBP/USD  25-05-2023

Daily Analysis For GBP/USD 25-05-2023

GBP/USD Analysis
Key Points for GBP/USD pair
• The GBP/USD currency pair has experienced a rebound from the level of 1.2330. However, the overall bias remains tilted towards the downside.
• Investors are primarily focused on the issues surrounding the US debt ceiling, giving more weight to this concern rather than the dovish signals coming from the Federal Open Market Committee (FOMC) minutes.
• In the United Kingdom, Jeremy Hunt, a prominent figure, expressed confidence that inflation will be reduced by half by the end of the year.

Today's Scenario: - The GBP/USD currency pair is currently trading at a 1.5-month low, hovering around the 1.2350 level during early Thursday, after recently hitting a multi-day low.
The lack of significant movement in the Cable pair can be attributed to the overall sluggishness in the markets. However, concerns regarding the potential US default and the UK's inflation figures, which failed to sustain bullish momentum for long, are exerting downward pressure on the Pound Sterling.
According to the Consumer Price Index (CPI) data, UK's inflation rose by 8.7% year-on-year in April, compared to the previous month's figure of 10.1% and market expectations of 8.2%. UK Finance Minister Jeremy Hunt expressed the need to bring down inflation in order to implement tax cuts. Similarly, Bank of England (BoE) Governor Andrew Bailey has previously defended the central bank's hawkish stance.

Diagram of GBP/USD
Economic Events: -
00:01(United Kingdom) Car Production YoYLowGBP
00:50(Japan) Foreign Bond InvestmentLowJPY
00:50(Japan) Stock Investment by ForeignersLowJPY
01:00(Australia) RBA Payments System Board MeetingLowAUD
04:35(Japan) 40-Year JGB AuctionLowJPY
07:00(Germany) GDP Growth Rate QoQMediumEUR
07:00(Germany) GDP Growth Rate YoYMediumEUR
07:00(Germany) GfK Consumer ConfidenceHighEUR
07:45(France) Business ConfidenceMediumEUR
07:45(France) Business Climate IndicatorLowEUR
08:00(Spain) PPI YoYLowEUR
09:30(Slovenia) Tourist Arrivals YoYLowEUR
09:30(Slovenia) Business ConfidenceLowEUR
10:00(Euro Area) ECB Annual Report 2022LowEUR
10:00(Euro Area) ECB Guindos SpeechHighEUR
10:10(Italy) BTP Short TermLowEUR
11:00(United Kingdom) CBI Distributive TradesMediumGBP
11:00(Latvia) Unemployment RateLowEUR
12:00(Canada) CFIB Business BarometerLowCAD
13:30(Canada) Manufacturing Sales MoMLowCAD
13:30(United States) Jobless Claims 4-week AverageHighUSD
13:30(United States) Continuing Jobless ClaimsHighUSD
13:30(United States) Initial Jobless ClaimsHighUSD
13:30(United States) Chicago Fed National Activity IndexMediumUSD
13:30(United States) Real Consumer Spending QoQLowUSD
13:30(United States) GDP Sales QoQLowUSD
13:30(United States) Core PCE Prices QoQLowUSD
13:30(United States) PCE Prices QoQLowUSD
13:30(United States) GDP Price Index QoQMediumUSD
13:30(United States) Corporate Profits QoQMediumUSD
13:30(United States) GDP Growth Rate QoQMediumUSD
13:30(Canada) Average Weekly Earnings YoYLowCAD
15:00(United States) Pending Home Sales YoYMediumUSD
15:00(United States) Pending Home Sales MoMMediumUSD
15:30(United States) EIA Natural Gas Stocks ChangeLowUSD
15:30(United States) Fed Collins SpeechMediumUSD
16:00(United States) Kansas Fed Composite IndexLowUSD
16:00(United States) Kansas Fed Manufacturing IndexLowUSD
16:30(United States) 8-Week Bill AuctionLowUSD
16:30(United States) 4-Week Bill AuctionLowUSD
17:30(United Kingdom) BoE Haskel SpeechLowGBP
18:00(United States) 7-Year Note AuctionLowUSD
23:00(New Zealand) ANZ Roy Morgan Consumer ConfidenceLowNZD

Buy Scenario: - On the buying side of GBP/USD, if there is a recovery and the pair moves above the high of May 09 at 1.2640, it will drive the GBP/USD towards the resistance level at the round number of 1.2700, followed by the high of April 26, 2022, at 1.2772. Till we do not advise to buy GBP/USD.

Sell Scenario: - The GBP/USD currency pair is currently challenging a demand zone that is confined within a narrow range of 1.2344-1.2356 on a four-hour time frame. The pair is exhibiting a Falling Channel chart pattern, where market participants view each pullback as an opportunity to sell.
The bulls supporting the Pound Sterling are consistently encountering resistance from the 20-period Exponential Moving Average (EMA) located around 1.2412.
Meanwhile, the Relative Strength Index (RSI) with a 14-day period has fallen into the bearish range of 20.00-40.00, indicating the presence of downward momentum.
If the pair breaks below the low of April 10 at 1.2344, it will further strengthen the US Dollar bulls, causing the GBP/USD to decline towards the low of April 03 at 1.2275, followed by the high of March 14 at 1.2204. Till then we do not advise selling GBP/USD.

Support and Resistance Level: -
S1 1.2325-R1 1.2437
S2 1.2286-R2 1.2509
S3 1.2214-R3 1.2548


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