(MENAFN- Daily Forex) Advertisement Heavy swings in the dollar make highly profitable trades
- Sell the pair and set a take-profit at 1.0400.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
- Set a buy-stop at 1.0800 and a take-profit at 1.0900.
- Add a at 1.0700.
The GBP/USD pair remained under pressure after mixed economic data from the United States and the UK. It was trading at 1.0683 on Wednesday morning, which was lower than Tuesday's high of 1.0930. The price has dropped by more than 20% this year alone.UK and US divergent paths
The GBP/USD continued retreating as signs of a divergence between the UK and US economies emerged. to Bloomberg, UK's property market is going through a difficult period as lenders starte pulling mortgage offers as interest rates rose. On Monday, Lloyds Bank halted some offers. Companies like Virgin Money and Kensington also ended their offers this week.
All this happened at a time when the UK economy is facing substantial pressure after the decision by Kwasi Kwarteng to slash taxes. Data shows that UK's stock market has shed over $500 billion worth of value since the new administration took office. The UK is also facing the challenge of soaring energy costs and Brexit.
The US, on the other hand, appears like it is doing well. Inflation has fallen slightly in the past two months. This trend has also led to more robust consumer confidence. According to the Conference Board, confidence rose to 108 in September, the second straight month of increase.
The housing sector also seems to be doing well even as interest rates rises. New home sales rose by 28.8% in August to 685k. This increase was better than the median estimate of 500k and the previous month's 532k. The US will publish the latest pending home sales numbers later today.
Therefore, these numbers mean that the Federal Reserve will continue hiking interest rates in the coming months. Analysts expect that the bank will hike by 75 basis points in November followed by 0.50% in December.GBP/USD forecast
The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few weeks. It has fallen to the first of the standard pivot points. Also, it has crashed below all moving averages while its attempt to recover found a strong resistance level at 1.0918.
Oscillators like the Relative Strength Index (RSI) and the Awesome Oscillator have also declined. Therefore, the pair will likely remain under intense pressure in the coming days as sellers target the second support at 1.0400.
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