GBP/USD overall outlook remains bearish – FXStreet

FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, sees GBP/USD exhibiting a bearish tone while it remains below 1.5000 on a daily closing basis, and further expecting GBP bulls to opt out of the race as the BoE minutes would likely reflect a wait-and-see approach by members.

Key Quotes

“The pair now trades at 1.4937 levels with traders eyeing the Bank of England (BOE) minutes from the April 9th meeting. This will be the last set of comments from the BOE members before the elections.”

“The minutes are widely expected to show a unanimous 9-0 vote in favor of keeping monetary policy unchanged. If the number of policymakers in favor of hiking rates sooner than later increases, the pair could make a fresh attempt at 1.5 levels. However, with GBP at multi-year highs against the EUR, there is a very little probability that policy makers would favor a rate hike this year.”

“The last month’s PMI reports in the UK showed growing concern among industrials regarding the strength in the GBP against the EUR. Thus, it is more likely that the tone has turned more dovish, with policy makers increasingly favoring a wait-and-watch approach. In such a case, the GBP bulls could opt out, thereby taking the pair below 1.4865 levels.”

“As per technical charts, the 50-DMA located at 1.4962 is likely to act as a strong resistance, since the gains are being capped at the same for two consecutive sessions. Additionally, the 5-DMA at 1.4939 is proving to be a stiff resistance at the moment. Sellers are likely to chip in anywhere till the 50-DMA, a break above which can open doors for an intraday rally to 1.5 levels.”

“On the other hand, failure to sustain above 1.4936 (23.6% Fib retracement of 1.4564-1.5051) could open doors for a re-test of 1.4865 levels.”

“The overall outlook stays bearish till the pair does not confirm a daily close above 1.5 levels.”