The British pound was seen trading lower yesterday, as the BOE quarterly inflation report highlighted a few concerns of the central bank. The British pound traded lower against almost all major currencies, including the Australian dollar. The GBPAUD pair looks like oversold as of writing, so there is a chance of a short term correction, which I think might present us a nice selling opportunity.
There was an important support area around the 1.8010-20 levels, which was broken yesterday. Now, the same support might act as a resistance. So, if the pair moves higher from the current or a bit lower levels, trades closer to the mentioned resistance area and forms a bearish divergence, then we can enter into a sell trade.
Initial target should be around the 1.7900 level, and final target could be around the 1.7850 level. Stop should be above the 1.8080 level.
Reviewing yesterday’s events and trades
Yesterday, turned out be a game changer for the British pound. The GBPUSD pair was hammered after the BOE inflation report was released, and the pair traded a lot lower as expected. The GBPUSD traded from 1.6840 to 1.6700 yesterday. Moreover, the EURUSD pair managed to jump higher, but failed to trade above the 1.3400 level. The US retail sales data was published during the NY session, which missed the expectation of 0.2%. However, the US dollar is still trading higher against most major currencies.
Fundamental Outlook for the day
Today, the US initial jobless claims data, the import price index and the Bloomberg consumer confidence index will be released. Let us see how the outcome shapes up. There is a chance that the US dollar might continue trading higher, but the odds of a correction are also increasing. So, we need to be very careful chasing the US dollar higher from the current levels, as it might present us a risk of a short-term top. The EURUSD pair is looking to trade higher, but unable to do so, as there is no fundamental reason for a rise.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPAUD, EURUSD, NZDUSD and EURGBP.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!