GBP/USD, GBP/JPY, GBP/AUD Price Setups

British Pound vs US Dollar, Australian Dollar, Japanese Yen – Pricing:

• GBP/USD Despite its recent withdrawal, it still looks heavy.
• sharp pullback Pound/Australian Dollar The risk of a more severe setback in the short term increases.
• pound/yen Struggling to break through key resistance.

A relatively light week on UK macro indicators could leave the British pound at the mercy of some peers.

After a staggering outperformance since February, UK macro indicators have generally disappointing since mid-May, according to the Economic Surprises Index. Nonetheless, better-than-expected data from the beginning of the year have prompted a lift in economic forecasts for this year. Meanwhile, a slower-than-expected slowdown in UK inflation in April has raised the odds that the Bank of England (BOE) will raise interest rates this month.

The BOE raised its policy rate by 25 basis points in May after pausing it in April, but the market is pricing in almost four rate hikes by the end of the year, with a final rate of 5.41 from the current 4.50%. %become. There could be some turmoil for the British pound next week as UK employment, GDP and manufacturing output figures are released ahead of the June 22nd meeting of the BOE. Until then, the pound may be taking a breather after a spectacular run-up with its peers.

GBP/USD daily chart

Chart created by Manish Jaradi using TradingView; Notes at the bottom of the page

GBP/USD: looks heavy

On the technical chart, GBP/USD has moved into a consolidation phase amid the overall bullish phase on the daily chart, as shown by the color-coded candlestick chart. Short-term momentum remains weak, indicating further weakness in the currency pair is likely. For more information, see our previous update published on May 25, ‘British Pound Ignores His CPI Soar: What’s Next for GBP/USD, EUR/GBP, GBP/JPY?’ please give me.

GBP/USD daily chart

Chart created by Manish Jaradi using TradingView

A break below the end-May low of 1.2300 as a near-term cushion could initially open the downside to 1.2200 and potentially to the 200-day moving average (around 1.2000). Zooming out from a medium-term perspective, this month’s rally to May’s one-year high confirms the highest-high-high-low sequence since late 2022, leaving the door open for some medium-term gains. remains. (See our 8 May issue, “Better than the BOE: Is there room for more?”).

GBP/JPY daily chart

Charts created using TradingView

GBP/JPY: Struggling to Clear Channel Resistance

Having struggled to break through resistance at the mid-line of the Pitchfork Channel since February (see chart) and not far from the tough wall at October’s high of 172.10, the pound/yen rally is likely to continue in the near term. Retreat is more likely. . A break below 172.00 would indicate that upside pressure has weakened for now, opening the door to some consolidation/minor pullback. The initial cushion is around 171.25, with a stronger cushion at the mid-May low of 167.85.

As we highlighted in our last update, beyond the short term, there are still no signs of a reversal in the five-month uptrend, but evolving price dynamics suggest the cross may need to take a breather. suggesting.

Pound/Australian Dollar Weekly Chart

Charts created using TradingView

GBP/AUD: Is the time ripe for further setbacks?

The sharp drop in GBP/AUD over the past few days has made it even more vulnerable in the short term. This follows a pullback from strong horizontal trendline resistance around 1.9200 (see chart). The 14-week Relative Strength Index has retreated from overbought conditions, levels associated with cross pullbacks. GBP/AUD is testing a critical lower bound at early May lows of 1.8590, so some rebound cannot be ruled out. But that support is unlikely to last long. A break below this could open the door to the early April lows of 1.8250.

Note: In the color-coded chart above, blue candlesticks represent bullish stages. A red candlestick represents a bearish stage. Gray candlesticks act as a consolidation stage (within a bullish or bearish stage), but they also tend to form at the end of a trend. Note: Candle colors are not predictive and merely indicate current trends. In fact, the candle color can change on the next bar. False patterns can occur around 200-period moving averages, around support/resistance, and/or in flat/volatile markets. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Information users use the information at their own risk.

— By DailyFX.com Strategist Manish Jaradi

— Contact and follow Jaradi on Twitter: @JaradiManish