There was nothing stopping the British pound from further rising against the U.S. dollar. While we still anticipate near-term corrections in the strong performance of the GBP/USD, we need to pay attention to the solid uptrend. The pound was able to stabilize above 1.40 and if it extends its gains above 1.4060 we could possibly see a run for 1.4170. On the bottom side, we expect some fresh support coming in at 1.3950. However, traders should bear in mind that corrections are inevitable following the strong performance of the recent days and weeks. One look at the weekly chart below is enough to realize that the cable approaches overbought territory and thus faces the risk of pullbacks.
Meanwhile, the U.S. dollar suffered another setback against its major counterparts. U.S. President Trump’s decision to put tariffs on imported solar panels and washing machines may stoke protectionism and fears of trade wars.
The euro trended upwards, contrary to expectations, ahead of tomorrow’s ECB meeting. We still see the risk of profit-taking in the EUR/USD given the possibility of dovish comments from ECB President Draghi at tomorrow’s ECB’s press conference. For now, we expect the EUR/USD to trade between 1.2380 and 1.2250.
Important economic data that could have an impact on today’s price action:
8:30 EUR German PMI Report
9:30 UK Labor Market Report
15:00 USA Existing Home Sales
(Time Zone UTC)
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