GbpUsd Midterm short trend

Despite the mixed data in March, the market acknowledges the view that the Fed will continue its tight monetary policy by implementing four interest rate cuts of 25 basis points each throughout the year. While the Fed maintains its tight policy, we anticipate that the Bank of England (BoE) will enter a faster easing process compared to the Fed. Strong U.S. data suggests that the U.S. market can uphold its tight monetary policy without slipping into a recession, whereas technically, according to the latest growth data, the UK is already in a recessionary state. In this recessionary environment, we believe that the Bank of England will not be able to sustain its tightening monetary policy as long and as decisively as the Fed. Germany entering a deflationary phase early and signals of the beginning of deflationary processes in other major EU member states provide additional incentives for the BoE to ease its policy. Due to the correlation with the EU economy, the UK can conduct a faster easing process compared to the Fed without exacerbating the recession process.

From a technical perspective, we observe that the price rally has created overbought conditions, and the price reacted downwards by using the Fibonacci 76.4% level, which serves as resistance, as a reference for correction.

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We may see a corrective pullback in the price, which has descended to the 50% Fibonacci support level, with the support of the DXY. If there is a corrective rise, the intersection area of the 38.2% Fibonacci resistance and the moving averages forms a good resistance zone to attempt a new sell trade.

We recommend closing a portion of your current trades to take some of your profits now and suggest supporting your remaining positions with additional sell trades if a pullback occurs.

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The price reached one of the primary targets at the 61.8% level. We may see a corrective rise before or during the FOMC. We are monitoring the price movement to initiate a new sell trade.

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The expected corrective rally occurred during the FOMC meeting. We are observing how the price will react at the 61.8% level for the continuation of the downtrend.

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Prior to the unemployment and inflation data to be released on Thursday and Friday, the market might be in a holding pattern. During this period, we are likely to see broad band lateral movements, and the main trend will swiftly continue after the Core PCE data is announced on Friday. Until Thursday, we might witness rises and lateral movements in the price.