On Thursday, May 1, the GBPUSD currency pair pulled back from the 1.34000 level and fell below 1.33000. The price consolidated below this level on Friday, May 2, and remained there on Monday of this week. The 1.33000 mark has now become the resistance. However, the price history shows that this level is too weak to effectively restrain or support the quotes. This mark is exactly in the middle of the 1.32000–1.34000 trading range that the currency pair entered on April 15. Nevertheless, there is a high probability that the price will pull back from 1.33000 and decline further to the lower boundary of the range at 1.32000.
The Relative Strength Index (RSI) on the daily timeframe reached 55 last week moving out of the overbought zone, indicating a selling trend.
The MACD (moving average convergence/divergence) indicator on the daily timeframe is hovering above zero, but is still trending downward. This signals a strong weakening of the currency pair's upward trend.
Currently, the rate is at the level of the nine-day moving average. This could solidify the 1.33000 level as the resistance. The 50-day moving average is significantly below the current price and could become a target if the downtrend is confirmed.
Traders are in no hurry to place new bullish bets and are waiting for the key UK monetary policy event on Thursday, May 8 — the Bank of England (BoE) meeting. The BoE is expected to cut interest rates by 25 basis points and adopt a softer stance due to risks of slowing economic growth amid the trade dispute.
Additionally, traders will focus on the results of the two-day Federal Open Market Committee (FOMC) meeting on US monetary policy on Wednesday, May 7, which will affect USD price dynamics. The Federal Reserve is expected to keep interest rates unchanged.
Trading strategy option: sell at the current price with Take profit at 1.32000 and a Stop loss at 1.34000.
This content is for informational purposes only and is not intended to be investing advice.
