GBP/USD: forecast for May 30 - June 5
Broadly speaking, June is expected to become a volatile month for the British currency. Markets remain occupied with the Brexit referendum due on June 23. If the United Kingdom votes to abandon the European Union (EU), sterling could lose its role of the world reserve currency and depreciate significantly in all the major currency pairs. According to Britain’s Finance Minister Osbourne, a Brexit could pull the UK economy into a long-lasting recession, potentially forcing the extermination of more than 800,000 jobs in two years. All these expectations are expected to hurt the British pound in the coming weeks.
From the technical viewpoint, GBP/USD has been forming a rising wedge pattern since February. We see potential for a double top with resistance at 1.4760 being formed before the long-term downside is resumed. Key support is now seen at 1.4500. Break below would confirm the end of the bullish move. This forecast coincides with the rising US rate hike expectations.