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GDP Contraction! GBPUSD Extends Decline
Summary:
Boosted by news of an agreement between the United States and Iran, market sentiment improved further, and the British pound continued its upward trend against the U.S. dollar that began earlier this week.
Sell
TradingGBPUSD
EXP
1.34289
Entry Price
1.31000
TP
1.36000
SL
1.34244 +0.00139 +0.10%
0
Point
Flat
1.31000
TP
CLOSING
1.34289
Entry Price
1.36000
SL
Fundamentals
Underlying pressures in the UK economy have also provided key guidance for the pound’s recent performance. Data from the Bank of England’s quarterly inflation expectations survey released last Friday showed that, due to the lingering impact of earlier sharp rises in energy prices, the public’s long-term inflation expectations hit a record high in May. Specifically, one-year inflation expectations surged from 3.2% to 4%, while five-year inflation expectations rose to 3.9%. Both indicators deviated significantly from the Bank of England’s 2% inflation target and reached their highest levels since records began in 2009.
Currently, investment banks hold significantly divergent views, further amplifying market uncertainty: Goldman Sachs has raised its medium- to long-term inflation forecasts for the U.S., scrapped its expectation of rate cuts in 2026, and pushed back the timing of rate cuts to 2027; JPMorgan forecasts that the new Fed leadership will maintain a steady and neutral policy stance, leaving room for only two rate cuts by year-end; Citi, however, maintains a dovish stance, forecasting that the Fed will begin a rate-cutting cycle in the third quarter. The divergence in bullish and bearish views among major institutions is expected to intensify volatility in the U.S. Dollar Index.
Technical Analysis
On the daily chart, the GBP/USD pair shows Bollinger Bands widening downward and moving averages diverging downward, indicating a high probability of further declines. The RSI stands at 50, indicating that market participants are largely adopting a wait-and-see approach. On the 4-hour chart, the Bollinger Bands are widening upward, moving averages are diverging upward, and the MACD fast and slow lines have returned above the 0-line, suggesting that the overall rebound has not yet been confirmed as over. The RSI stands at 57, indicating that market participants are largely adopting a wait-and-see approach. Strategically, look to sell on rallies.
Trading Recommendation
Trading Direction: Sell
Entry Price: 1.343
Target Price: 1.31
Stop-Loss Price: 1.36
Support Levels: 1.32, 1.30, 1.28
Resistance Levels: 1.37, 1.38, 1.41
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