The price of GBPUSD has fallen again after the Bank of England announced a rate hike. Will the price continue lower?
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The Bank of England hiked rates today by 75 bps bringing rates to 3.00%. This was then followed by comments from the Bank of England Governor Bailey stating the UK is in a long term recession. This set the GBP weakness off with the sterling falling against all the major currencies including the USD. In the US the Federal Reserve hiked rates by 75 bps too bringing rates up to 4.00%. The Federal Reserve Chairman Jerome Powell stated that they could slow the pace in which they tighten but also bring rates higher. This was met with buying of the USD which put pressure on major currencies.
The price has found resistance at the 1.1600 handle which is also a resistance formed by a long term trendline from the weekly chart. This suggests the weekly downward trend is going to continue, if it does we could see the price retest the previous lows of 1.0950 or even 1.0700 if the price can trade through the lows.
The 4hr shows the price forming lower lows and lower highs which is indicative of a weekly impulsive phase. If this continues we should see the price form a lower high at some point. This could occur back at the previous lows around 1.1400 handle. Alternatively, if the price forms a low ranging pullback we could look for the market to trade lower on a breakout.
Did you see our CADJPY Analysis? You can see it here.
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