GBP/USD: Prepare For Reversals
Dear Traders,
U.S. President Donald Trump accused China and Russia of devaluing their currencies with the consequence that investors refrained from buying dollars amid concerns about the U.S. policy. The dollar further weakened against the euro and pound.
The British pound was the best performing currency on Monday and rose to a high of 1.4344. While buyers in the GBP/USD were recently able to gain a good profit by the cable’s upward move, we now prepare for pullbacks that could send the pound back towards a test of the 1.4250/70-support. Bear in mind that the pair is in overbought territory, a situation that makes upcoming corrections more likely.
Today we will watch the U.K. employment report at 8:30 UTC which could have an impact on the pound.
The EUR/USD was accompanied by an upward tilt but the euro still refrained from taking out the 1.24-barrier. As mentioned in yesterday’s analysis, we expect a higher resistance-zone to come in at 1.2430-50 but for now, a break above 1.24 must be done first. If the euro, however, formats a double-top below 1.24, bearish momentum may gather steam, driving the euro back towards 1.2350 and possibly even 1.23.
The German and Eurozone ZEW Surveys are scheduled for release at 9:00 UTC, but the impact on the euro could be short-lived.
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