GBPUSD, H4
Yesterday, the GBPUSD pair fell throughout the European and US trading sessions, falling more than 160 pips from the 1.3696 opening price to close at 1.3529, marking a new low of the last 12 months. After bond yields continued to rise from the week before, the 10-yr hit a multi-month high of 1.55% (now 1.52%), causing the stock market to collapse, with the USA100 the worst performer losing -2.83% for its worst day since March 2020. The US Dollar was at its highest in 10 months, with the USDIndex hitting a new high of 93.80.
Fed Chair Powell reiterated in a statement to the Senate that as the economy continues to reopen and spending begins to recover, price pressure is expected to increase. The impact of supply chain bottlenecks in some sectors will be larger and longer than expected and Inflation is expected to fall back to the 2 percent target over the long term. However, the Fed will do whatever it takes to sustain an economic recovery.
On the British side, yesterday the FTSE 100 fell -0.5% on concerns about Chinese property developers and interest rate hikes. On Monday, BoE Governor Bailey said the fastest rate hike could happen this year, although the bond purchase plan has not yet ended.
Yesterday’s heavy drop resulted in GBPUSD retracing above 1.3500, which is now trading at 1.3544, testing the lower band of the Channel. It has key support at 1.3500, while the RSI’s overbought rebound target, including bullish divergence, will be at 1.3600.
Today’s economic calendar includes keynote speeches by both Fed Chairman Powell and BoE Governor Bailey, as well as the weekly report on US home sales figures.
Click here to access our Economic Calendar
Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand
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