- A significant selloff in the past 24 hours for the British Pound Sterling versus the US Dollar, with GBPUSD wiping out much of the upside progress of the past week.
- This has primarily been due to a resumption of some modest, broad US Dollar strength, on hopes of a fiscal stimulus package from the US, maybe easing pressures for lower US interest rates.
- Furthermore, this likely reflects hesitancy for the Pound, ahead of today’s UK budget, where tax cuts and government spending increases are likely, again for a fiscal boost to the UK economy.
- Here we look at the prospects for GBPUSD.
GBPUSD day trade outlook: Threat to the downside
An aggressive plunge lower Tuesday through numerous supports as deep as 1.2900 down to 1.2865 to reject Monday’s surge through the key 1.3069/70 area for an intermediate-term bullish shift, to shift the threat lower into Wednesday.
· We see a downside bias for 1.2865; a break below aims for 1.2839, then 1.2770/65, maybe key 1.2725.
· But above 1.2980/85 targets 1.3039, which we would look to try to cap; above opens risk up towards 1.3080.
GBPUSD intermediate-term outlook
We see an intermediate-term bull trend with the break above 1.3070.
· Upside risks: We see upside risks for 1.3209 and maybe 1.3515.
· What changes this? Below 1.2725 switches the intermediate-term bull trend straight to a bear trend.
Daily GBPUSD Chart