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Trend May Be Shifting, with Pound Short Positions on the Rise
Forex
Summary:
The technical chart has formed a head-and-shoulders top pattern, suggesting the short-term downtrend may persist.
Sell
TradingGBPUSD
EXP
1.34320
Entry Price
1.30100
TP
1.34800
SL
1.34183 +0.00061 +0.05%
0
Point
Flat
1.30100
TP
CLOSING
1.34320
Entry Price
1.34800
SL
Fundamentals
Recent indications of softening in the UK labor market, with official data showing unemployment rising to near-term highs, suggest weakening employment momentum. This diminishes the rationale for the Bank of England to maintain a hawkish stance, leading markets to price in earlier or more gradual monetary easing, exerting downward pressure on the pound.
Meanwhile, although UK CPI remains above the 2% target, it has retreated to 3.6%, indicating a cooling of inflation that provides room for policy pivoting. If upcoming months continue to show subdued inflation and employment figures, market expectations for monetary easing by the Bank of England will intensify, further depressing the pound.
It is noteworthy that internal Bank of England officials have warned that while labor market conditions have loosened, they have not collapsed, adding to policy uncertainty. Such uncertainty often amplifies in the forex market, creating short-term opportunities to establish short positions during sentiment retracements.
Technical Analysis
In the 1D timeframe, the recent candlestick pattern of the GBPUSD has formed a head-and-shoulders top formation, with the neckline at 1.3330 broken. This suggests that the short-term trend for the GBPUSD may lean more toward a decline. Concurrently, as the 144-day SMA crosses below the 60-day SMA and the 20-day and 10-day SMAs, the SMA system has formed a death cross pattern. This further increases the likelihood of a near-term downtrend.
Currently, despite several consecutive days of upward rebound, the GBPUSD remains under pressure below the 60-day SMA, resulting in continued weakness in the exchange rate. If a long upper shadow bearish candlestick closes today, the bearish momentum for the GBPUSD will be significantly amplified.
Trading Recommendations
Trading Direction: Sell
Entry Price: 1.3430
Target Price: 1.3010
Stop Loss: 1.3480
Valid Until: October 31, 2025 23:00:00
Support: 1.3248, 1.3141
Resistance: 1.3471, 1.3584
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