It has been a while since we didn’t cover the GBPUSD pair here and there was a solid reason for it: the UK referendum. Before the vote, it was too risky to trade the pair, after the vote, needed some time to see how the pair settles.
Having said that, and despite recent Fed decision to keep rates on hold, the GBPUSD is not bullish here.
From a fundamental point of view, the rate cut Bank of England provided, together with the mini-QE package launched, seems to have worked just fine in harboring the bearish outcome of the Brexit vote. Moreover, at the last press conference, Governor Carney called for another rate cut to be delivered this year.
This rate cut, coupled with a rate hike from the Fed, as almost all Fed members saw another rate hike this year, should translate in a way lower GBPUSD rate. This should come as no surprise given the uncertainties, both political and economical that surround the United Kingdom.
From a technical point of view, after the initial drop (which, by the way, is an impulsive move), the market formed a flat with a double failure. This is a beautiful pattern as it appears only in specific places and one of those places call for lower levels.
All in all, look for the Brexit lows to be broken and a sharp move lower to come, with 1.3280 area as a stop and 1.2650 area as take profit to be enough for a nice trade.
About Mircea Vasiu
Mircea Vasiu has an MBA in International Business from an American University, graduating Magna Cum Laudae. He has been a professional trader for the last 8 years and is involved in various educational projects for different financial companies.