GBP/USD analysis: no signs of a bottom just yet

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3295

Lesser chances of a UK rate hike in the second half of 2018 hurt the Pound.
Disorderly Brexit could even result in a rate cut, Carney says.

The GBP/USD pair closed the week at a fresh 2018 low of 1.3295, hit on Friday by the second estimate of UK GDP for the first quarter of the year, which came in unchanged at 0.1%, further denting chances of a rate hike in the second half of this year. Total business investment for the same period, suffered a downward revision to -0.2% from the first estimate of 0.3%, indicating that things won't be getting better in the foreseeable future. Dovish comments from BOE's Governor Carney, added to Pound's weakness, as he said that the central bank could cut interest rates again in the event of a ‘disorderly’ Brexit. The UK will kick start the week with a bank holiday, and the local macroeconomic calendar has little to offer until Friday, with the release of May preliminary Markit manufacturing PMI, expected at 53.6 from the previous 53.9. The daily chart for the pair shows that, after a period of consolidation at the beginning of the month, it resumed its bearish trend that has not yet found a bottom, as technical indicators accelerated their slides, with the Momentum easing modestly, but at fresh 2-week lows, and the RSI heading south around 21. Shorter term, and according to the 4 hours chart, the pair is also biased lower, with a bearish 20 SMA providing a dynamic resistance at 1.3365 and technical indicators leaned lower, the Momentum without directional strength but the RSI accelerating lower and supporting further slides ahead.

Support levels: 1.3280 1.3245 1.3210

Resistance levels: 1.3320 1.3365 1.3400

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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