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Trust Collapses! GBP/USD Continues Its Downward Spiral
Summary:
In the UK, investors are eagerly awaiting the release of first-quarter GDP figures on Thursday.
Sell
CLOSEDGBPUSD
End Time
1.35236
Entry Price
1.32000
TP
1.37000
SL
1.33242 -0.00762 -0.57%
1577
Points
Profit
1.32000
TP
1.33659
CLOSING
1.35236
Entry Price
1.37000
SL
Fundamentals
Health Secretary Wes Stretton is preparing to resign, with an official announcement expected as early as Thursday, and may challenge for the party leadership. Although Starmer has implored voters and party MPs to continue supporting him and to avoid a leadership contest that he says would only lead to chaos, the situation continues to take a turn for the worse. Robert Wood, Chief UK Economist at Pantheon Macroeconomics, said: “If enough ministers resign, the Prime Minister may be ‘forced’ to step down. His departure appears to be a matter of when, not if.”
Data from the US Department of Labour showed that the Producer Price Index (PPI) for final demand surged by 1.4% month-on-month in April, marking the largest monthly increase since March 2022 and far exceeding the 0.5% forecast by economists polled by Reuters; the March figure was revised upwards to 0.7%. Over the 12 months to April, the PPI rose by 6.0% year-on-year, the largest increase since December 2022, and also exceeded the expected figure of 4.9%. The core PPI, excluding food and energy, rose by 5.2% year-on-year and 1.0% month-on-month, both significantly exceeding market expectations.
Technical Analysis
On the daily chart, the GBP/USD pair shows narrowing Bollinger Bands and flattening moving averages, suggesting a potential reversal at any moment. The MACD fast and slow lines have formed a death cross, whilst the RSI stands at 50, indicating that market participants are largely adopting a wait-and-see approach. On the four-hour chart, the Bollinger Bands are widening downwards and the moving averages are diverging lower. The downward momentum of the MACD has weakened somewhat, and the price is likely to fall to around the round-number level. With the RSI at 43, market sentiment is predominantly bearish. The recommended strategy is to sell on rallies.
Trading Recommendation
Trading Direction: Sell
Entry Price: 1.353
Target Price: 1.32
Stop-loss Price: 1.37
Support Levels: 1.32, 1.3, 1.28
Resistance Levels: 1.37, 1.38, 1.41
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