The pair entered a consolidation phase after closing in red last week. The optimistic mood of the market is helping the pound hold its ground today against its competitors. Perhaps now is the best time to day trade the GBP/USD Forex pair.
What’s with the GBP/USD Forex rate?
The GBP/USD pair fluctuated heavily in the second half of the previous week, while investors digested the decisions of the US Federal Reserve and the Bank of England (BOE). The Fed raised its discount rate by 75 basis points (bp) and the Bank of England by 25 basis points. Both central banks have declared their commitment to remain on the path of tightening until they see a strong GBP/USD Forex signal of easing price pressures.
Earlier in current Forex news GBP/USD, Britain’s Junior Treasury Secretary Simon Clarke said the authorities did not expect the UK economy to slide into recession and argued that the long-term outlook was still “really positive”. While the GBP/USD Forex rate has not responded to these comments, the overall positive shift seen in market sentiment seems to be supporting the pair.
GBP/USD Forex news are inspiring optimism
Reflecting the optimism in daily Forex news GBP/USD, the UK FTSE 100 rose 0.5% at the start of the European session. The GBP/USD pair rose slightly at the beginning of Monday after closing for the third consecutive week in negative territory. However, the short-term technical outlook does not yet indicate a GBP/USD Forex signal i.e. an increase in bullish momentum.
Current Forex GBP/USD trading strategy
- The May 15 uptrend line remains unbroken, with the 4-hour Relative Strength Index (RSI) holding slightly above 50, suggesting sellers hold off on action for now.
- On the other hand, the 50 SMA forms first resistance at 1.2270 ahead of 1.2300 (psychological level, Fibonacci 50% retracement of the last downtrend).
- A 4-hour chart close above this latest level could be seen as a significant bullish event that could trigger another bullish move towards 1.2370 (61.8% Fibonacci retracement).
- Level 1.2220 (Fibonacci retracement 38.2%, uptrend line, 20-period SMA) forms initial support ahead of 1.2130 (Fibonacci retracement 23.6%) and 1.2100 (psychological level).
Given all this, consider these days the best time to day trade the GBP/USD Forex pair.
GBP/USD Forex news on levels
As the current Forex news GBP/USD suggest recently the instrument updated the low of the year at 1.2170 and is now trying to consolidate above it. The technical indicators reversed rather quickly and gave a new sell signal: the range of EMA fluctuations on the alligator indicator is expanding in the direction of decline, and the histogram of the AO oscillator is forming descending bars.
A universal Forex GBP/USD trading strategy recommends keeping track of levels. So please note the next ones. Resistance levels:
- Support levels:
As per the daily Forex news GBP/USD, the UK economy continues to slow down. Thus be aware of the high volatility on the market.