Could the Cable Break the 1.2520 Mark?

  • 7-week low for the Pound
  • Possible stimulus by the Bank of England
  • Failure in finalising the Brexit deal 

Technical Analysis:

The British Pound has been facing a huge sell-off since the end of April. It depreciated more than 4% against the US Dollar. It recorded 7-week low.

Looking at the chart below, the Pound tested the 1.2125 support many times. Now, it is approaching it for the third time. The higher probability Is to see an appreciation of the GBP/USD in the next days. However, in case the price managed to break this support, a downward movement could be seen. 

GBP/USD Monthly Support

Moving to the lower time frame, the GBP/USD is displaying a regular divergence. 

The Pound is showing a lower low while the MACD is unveiling a higher low. If the bulls managed to push the pair above the blue trendline, we could see an appreciation of the Pound against the Greenback. On the other hand, if the bears are still succeeding to push the price lower, and leaving the sterling under the 1.2125 mark, a downward move could be seen. 

To have a better idea of how the price might move, you should have a look at the fundamentals outlook of this pair.

GBP/USD 4hr Divergence

Fundamental Analysis:

As the Brexit negotiation continues, it seems that there is no real progress happening. Great Britain is accusing the European Union that they are asking too much comparing to trade deals done with other countries.

Another reason that led the Pound to tumble is that the BOE declared if the government needs help, they can expand the bond-buying program.

UK Pound Sterling

The Greenback is showing power over the cable since the investors have a positive bias towards the Dollar, especially after the chair of the federal reserve refused to lower the interest rates to below zero.

The US economy is showing real progress after it started to reopen the last few days. 

After a 7-week low, could the Sterling bounce back and move upward again?



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