- For the Pound, the lack of progress on any Brexit agreement between the governing Conservative party and the opposition Labour party since the Brexit leave date was extended until 31st October 2019, has been disappointing for Forex participants.
- This has seen Sterling weaken over the past week, erasing prior May gains, which were driven by hopes of a cross party agreement.
- For the US Dollar, despite a shifting between “risk off” and “risk on” phases over the past 1-2 weeks during the escalation of the US-Sino trade war, the US$ has remained broadly firm against most major currencies, seen as a safe haven (though the Japanese Yen continues to be the short-term, “go to”, flight to quality currency).
- This has left the US$ generally strong in May with most “risk” currencies weaker (the Australian, New Zealand and US Dollars all lower versus the US currency in May).
- The overall impact then for the GBPUSD Forex rate has been to eradicate earlier May gains, to reinforce the intermediate-term bear trend from the prior break of key 1.2947, and to leave the immediate risks lower through mid-May.
GBPUSD bear bias intact
A selloff Tuesday through 1.2937 support to reinforce Monday surrender of 1.2966 and Friday’s rebound failure from below our 1.3081 resistance, to keep risks lower for Wednesday.
The latter April probe below 1.2947 signalled an intermediate-term Double Top pattern and set an intermediate-term bear trend, BUT risk is now for a break above 1.3196 for an intermediate-term bull shift.
- We see a downside bias for 1.2897; break here aims for 1.2864, then 1.2830/25.
- But above 1.2970 aims for 1.3047 and maybe opens risk up towards 1.3081.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.2771.
- Lower targets would be 1.2437, 1.2366 and 1.2109
- What Changes This? Above 1.3196 is needed to shift straight to a bull theme.
4 Hour GBPUSD Chart