The price of GBPUSD could soon reverse as the Commitment of Trader reports highlight the commercials continuing to build long contracts. In the past this has led to a reversal in the price.
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The GBPUSD price will be one to watch going into this week’s trading as we have multiple reasons to see the price go either way. The recent Commitment of Trader reports highlighted that the commercials are continuing to increase long contracts as the price of the GBPUSD falls. Their contracts are now at their highest for the past 18 months which can often lead to a reversal at key levels. However, last week the Bank of England Governor Bailey comments of recessionary fears drove the price lower towards the major 1.2500 level.
Not only this but the GBPUSD price could be dragged in opposite directions due to the upcoming FOMC meeting on Wednesday. The Federal Reserve is planning to hike rates by 50bps as previously stated by the Chairman Jerome Powell. If this move is priced into the markets we could see the USD weaken in the short term which could create long opportunities for the GBPUSD price.
From a technical perspective the price of the GBPUSD is bearish as the market looks to form lower highs and lower lows. However, if one of the fundamental catalysts was to enter the market in a way that sees the USD weaken and the price breaks above the current resistance highs around 1.2600 we could look for long opportunities. If the price retests the highs or forms bullish price action on a higher low we could look for opportunities long towards the major 1.2900 level.
Have you seen our recent Week Ahead Analysis? you can watch it here.
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