GBP/USD: the freefall is set to continue
By Kira Iukhtenko, FBS
GBP/USD fell bbelow the $1.6000 support on the past week, pulled by the strong US nonfarm payrolls. The post-referendum bullish move was unsustainable with the upside capped by the $1.6500 mark.
These days market participants returned to scrutinizing the Britain’s economic horizons. The UK economy still remains one the fastest growing in the advanced world, but is clearly losing some of its recent momentum. This comes in line with the BOE projections: exceptional growth is expected to slow down in the second half of the year.
On the new week the market attention will be glued to the monthly BOE meeting on Thursday. Monetary policy is widely expected to remain unchanged. Apart from that, don’t miss the Manufacturing Production data on Tuesday and the Trade Balance on Friday.
Regarding the technicals, there is a clear bearish picture seen on the weekly chart. Cast a glance at a long-legged doji candle that was followed by a bearish engulfing. Fix below $1.6000 will open the way for further depreciation of the cable. Next support is seen at $1.6000 (200-week MA), $1.5945 (55-month MA) and at $1.5850/40 (Nov. 2013 lows). According to our medium-term forecast, the price will likely hit the $1.5800 mark until the end of the year.