The next downside targets for GBPUSD are in the 1.225—1.23 range

23 April 2024 105
The next downside targets for GBPUSD are in the 1.225—1.23 range

The GBPUSD currency pair after some stabilization during the last week still continued its way down. For the first time since mid-November the price was below the level of 1.24, but this didn’t cause a significant reaction from the bulls. The current wave of GBP weakening against the dollar has reached most of the short-term targets, but the range of 1.225—1.23 could still be tested before a rebound upwards.

 

Friday's speech by Dave Ramsden, Deputy Governor of the Bank of England, contributed to another downward momentum in GBPUSD. The official expressed his opinion about a faster normalization of price growth than was indicated in the last official forecast of the British regulator. According to Ramsden's estimates, inflation will fall below 3% and will gradually approach the 2% target in the second half of 2024. With the exception of the services sector, price growth in all other segments of the British economy is already in line with these expectations.

 

Head of the Bank of England Andrew Bailey said at the meeting of the International Monetary Fund that the state of the national economy is now closer to the EU than to the US. He attributes this to almost zero GDP growth in Europe and the UK, while the American economy continues to expand steadily. On this basis, the monetary policy of the Bank of England should be more in line with the actions of the ECB, which is openly talking about the first key rate cut in June.

 

Citigroup analysts expect to see dovish comments from representatives of the British regulator following the results of the meeting on May 9. This will increase pressure on the pound, especially in pair with the dollar, which on May 1 could receive additional support from the tough rhetoric of Jerome Powell and other members of the Fed. According to Citigroup specialists' estimates, the wave of pound weakening will last 5–10 days after the central banks' meetings.

 

Despite a significant decline in GBPUSD in recent weeks, the RSI indicator hasn’t yet reached the oversold zone. Based on this, there are no technical obstacles for the price to move towards 1.23 and 1.225.

 


The following trading strategy can be suggested:

 

Sell GBPUSD at the current price. Take profit 1 — 1.23. Take profit 2 — 1.225. Stop loss — 1.242.

This content is for informational purposes only and is not intended to be investing advice.

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