Hello everyone,
Today, I've been focusing on GBP/USD, examining both its technical movements and the broader fundamentals impacting the forex market. Interestingly, GBP/USD traded within a very narrow range of just 10 pips between 1.2691 and 1.2701 for most of the European and half of the US trading session. This consolidation reflects a lack of significant movement or catalysts driving the British pound on Monday. Despite a brief upward movement during the US session, the overall volatility remained low, raising questions about the sustainability of any potential buy signals.
The consistent rise of the British pound without strong fundamental support has become a common occurrence in recent months. This illogical growth persists even on days with minimal market activity, such as Mondays, and despite the absence of significant fundamental or macroeconomic events. This upward trend persists despite expectations of a rate cut by the Bank of England in the summer. These observations reinforce the notion of groundless growth in the pound, making it challenging to justify buying the pair from a fundamental perspective.
Technically, GBP/USD is undergoing a bullish correction on the hourly chart. It successfully surpassed the 1.2605-1.2620 area on its second attempt, and the 1.2691-1.2701 zone also failed to halt buyers. However, the market's willingness to buy the pound irrespective of fundamental factors suggests a lack of grounding in the pair's movement, making it challenging to identify reliable patterns.
Looking ahead, there are no significant events or reports scheduled in the US for Tuesday. However, Bank of England Governor Andrew Bailey's speech could be noteworthy. While it would be interesting if the market reacted logically to his remarks, the prevailing trend suggests that any comments from Bailey are likely to be interpreted favorably for the pound.
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