Bottom line: GBPUSD long term structure might be turning bearish against 1.3200 resistance. Bears are looking inclined to be back in control after GBPUSD failed to break above 1.3200 handle last week. The currency might have carved a meaningful top around 1.3170 levels.
Fundamental Outlook:
EURUSD had raised through 1.1909 levels last week before turning lower amidst profit taking. Friday saw prices peaking at 1.1909 first and closing lower at 1.1770, swinging close to 150 pips. The exchange rate might come under further pressure as US Dollar might gain over the next few weeks.
FTSE had closed lower around 5900 on Friday, dropping by over -2.16%. The indice might be set to recover as markets open today and could reach 6100/50 mark. Global Markets might face another round of selloff as risk sentiment remains fragile over COVID-19 pandemic and US-China tensions.
GBPUSD also managed to push higher on Friday hitting 1.3170, before reversing sharply. The exchange rate swung over 130 pips before closing around 1.3080. Bank of England would be coming out with its monetary policy this week and GBPUSD exchange rate might be taking its cues from there.
COVID-19 infections continue to rise across countries as fear of the second wave grips further. Infections rise in Spain and Australia, as the city of Melbourne is being locked down again. Adding to this is the rising tensions between US and China as TikTok might be banned in the US. Risk aversion might return and the safe haven US Dollar might be set to gain, going further.
Technical Analysis:
GBPUSD had remained in control of bulls over the past several weeks after printing lows at 1.1414. The currency might have carved a meaningful top around 1.3170 levels over the last week as bears prepare to take control from here.
GBPUSD has also managed to carve a Shooting Star candlestick pattern on the Daily Chart since reversing from 1.3170 levels. High probability remains for a bearish reversal from here, and turn lower towards 1.1414 over the next several weeks.
Traders might be preparing to initiate fresh short positions around current price action (1.3060), with protective stops around 1.3200 levels. The projected target could be at least 1.2000 handle, if not further. GBPUSD might be good to sell on rallies going forward.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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