The pound remains under pressure from fundamental factors, among which are the risks of a tough Brexit and the subsequent slowdown of the British economy, as well as the consequences of the coronavirus pandemic.
The GBP / USD continues to decline, after the head of the central bank of Great Britain, Andrew Bailey, admitted yesterday that the Bank of England was forced to resort to a "much more aggressive" quantitative easing (QE) for overcoming the crisis caused by the coronavirus pandemic.
The Bank of England key rate is currently 0.1%, but "we are extremely close to zero interest rates", Bailey said. Earlier, the head of the Bank of England said that the leadership of the central bank is considering the possibility of applying negative interest rates.
This morning, the pound received another batch of negative after the Office of National Statistics released (at 06:00 GMT) data on UK GDP for May and the state of the manufacturing sector. According to the data, the UK gross domestic product in May grew by 1.8% (according to the forecast, an increase of 5% was expected) after falling by 20.3% in April.
Despite the growth observed earlier this month, the GBP / USD remains under pressure, again falling to the area below the key resistance level 1.2580 (ЕМА200 on the daily chart).
The breakdown of the short-term support level 1.2490 (EMA200 on the 4-hour chart) will confirm the scenario for a further decline in GBP / USD.
In an alternative scenario, and after the breakdown of the resistance level 1.2580 and the local resistance level 1.2670, GBP / USD will resume upward trend and head towards the resistance levels 1.2810, 1.2930, 1.3160 (EMA200 on the weekly chart), 1.3210 (Fibonacci level 23.6% of the correction to the reduce of the GBP / USD in a wave that began in July 2014 near the level 1.7200).
The most promising for the GBP / USD at the moment are short positions.
Support Levels: 1.2490, 1.2400, 1.2340, 1.2250, 1.2200, 1.2085, 1.2000, 1.1410
Resistance Levels: 1.2550, 1.2580, 1.2670, 1.2810, 1.2930, 1.3000, 1.3160, 1.3210
Trading Scenarios
Sell by market. Stop-Loss 1.2610. Take-Profit 1.2490, 1.2400, 1.2340, 1.2250, 1.2200, 1.2085, 1.2000
Buy Stop 1.2610. Stop-Loss 1.2480. Take-Profit 1.2670, 1.2810, 1.2930, 1.3000, 1.3160, 1.3210
