A move above the resistance point at 20,500 will invalidate the bearish view.

Bearish view

• Sell the BTC/USD pair and set a take-profit at 18,500.
• Add a stop-loss at 20,500.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 20,500 and a take-profit at 21,500.
• Add a stop-loss at 18,000.

The BTC/USD currency pair continued slumping on Monday morning as the recent sell-off continued. Bitcoin dropped to a low of $19,788, which was the lowest level since July 14 of this year. It has fallen by more than 20% from the highest point this month.

Hawkish Federal Reserve

Bitcoin, other cryptocurrencies, and stocks dropped sharply after Jerome Powell’s speech at the Jackson Hole Symposium in Wyoming.

In his speech, Powell warned that the Fed was still concerned about the significantly high inflation in the country. As a result, he said that the bank will continue hiking interest rates in the coming months. He also hinted that the Fed will likely leave interest rates at elevated levels in 2023.

His statement came a few days after Joe Biden announced that he will forgive student debt for millions of Americans. Some analysts believe that this debt forgiveness will cost over $1 trillion in a decade. It will also likely lead to some inflation in the coming months.

Powell’s statement mirrored that of other Fed officials like Mary Daly, Neel Kashkari, and Charles Evans. Therefore, there is a likelihood that the Fed will hike interest rates by 0.50% in the coming meeting in September.

Historically, Bitcoin and other risky assets tend to do well in a period when the Fed has embraced a more hawkish tone. The recent rebound was mostly because analysts were expecting the bank to start slowing its rate hikes and even start cutting in 2023.

Bitcoin’s crash coincided with a sharp decline in American equities. The Dow Jones crashed by over 1,000 points while the S&P 500 and the Nasdaq 100 indices dropped by over 3.3%. The futures market also signals that American shares will open sharply lower.

BTC/USD forecast

The four-hour chart shows that the BTC/USD price formed a triple-top pattern in July and August. It also formed a bearish flag pattern that is shown in green. In price action analysis, this pattern is usually a bearish sign. It also moved below the 78.6% Fibonacci Retracement level and the 25-day and 50-day moving averages.

Therefore, the pair will likely continue falling as sellers target the year-to-date low of 18,624 since it seems like they are in control. A move above the resistance point at 20,500 will invalidate the bearish view.

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The pair will likely continue falling as sellers target the next key resistance point at 1.1650.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1800.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.1800 and a take-profit at 1.1900.
• Add a stop-loss at 1.1700.

The GBP/USD price retreated after a series of worrying news about the UK economy and as volatility jumped. The pair dropped to a low of 1.1742, which was the lowest level since March 23rd this year. It has dropped by over 17% from the highest point this year.

Worries about the UK economy

The GBP/USD currency pair retreated sharply after some worrying economic numbers from the UK. In a report on Monday, Citigroup said that the country’s inflation will hit about 18.6% in January. If this happens, it will be the biggest increase in almost 50 years.

The investment bank attributed the sharp increase of inflation to the soaring wholesale gas prices. It estimates that the retail energy price cap will rise to 4,567 pounds in January and to 5,816 pounds in April next year. That will be a big increase considering that the current price is at 1,971 pounds.

The estimate by Citigroup is bigger than what the Bank of England (BoE), Goldman Sachs, and EY estimate. In its monetary policy meeting this month, the BoE estimates that inflation will start the year at 13.3%. Goldman and EY believe that inflation will be at least 15%.

The GBP/USD price also declined after the Office of National Statistics (ONS) revised the UK economic growth for 2020. In a report, the agency said that the country’s GDP contracted by 11% in 2020, the worst performance in the G7. It was also the worst contraction since 1,709. As a result, the growth in 2021 and 2022 will be staring at a lower point than estimated.

The pair also declined because of the broad US dollar strength. The dollar index rose to $109, the highest level in a month. Similarly, the VIX index, which is a good measure of volatility, rose by over 15% while stocks retreated.

GBP/USD forecast

The GBP/USD price has been in a strong bearish trend in the past few days as the US dollar strength continued. It managed to move below the important neckline of the double-top pattern.

The pair’s downward trend is being supported by the 25-day and 50-day moving averages while the Relative Strength Index moved to the extremely oversold level. It has also formed what looks like an inverted cup and handle pattern. Therefore, the pair will likely continue falling as sellers target the next key resistance point at 1.1650.

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The pair will likely continue falling as sellers target the next key support at 1.1750.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1750.
• Add a stop-loss at 1.1900.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.1900 and a take-profit at 1.2000.
• Add a stop-loss at 1.1800.

The GBP/USD price crashed to the lowest level since July as the US dollar rose across the board. It dropped to a low of 1.1830, which is much lower than this month’s high of 1.2288.

US dollar strength

The GBP/USD pair continued its downward trend as the US dollar staged a major rally. The greenback rose against most currencies, including the Swiss franc, euro, and Japanese yen. As a result, the dollar index, which tracks its performance against a basket of currencies, rose to the highest point in weeks.

The US dollar strength continued after Chinese data showed that the economy was weakening. Industrial production and retail sales growth was lower than estimated, pushing the PBoC to lower rates on key bonds.

The strength then accelerated after the Federal Reserve published minutes of its past monetary policy meeting. The minutes showed that the bank’s officials were increasingly concerned that inflation will become entrenched in the economy for a long time.

At the same time, the officials were worried about moving too fast and too soon on rate hikes. It has already hiked interest rates by 225 basis points this year and started implementing a quantitative tightening policy.

Federal Reserve speakers like Charles Evans, Lorretta Mester, and Neel Kashkari said that the bank will likely continue hiking in the coming meetings. Expectations are that the bank will hike by 0.50% in its September meeting.

There will be no economic data from the UK and the US on Monday. Therefore, the market will continue focusing on last week’s actions of the Federal Reserve.

The next key economic numbers will come on Tuesday when S&P publishes the flash manufacturing and services PMI numbers. Analysts expect that the PMIs made some modest improvements in August as the price of oil dropped slightly.

GBP/USD forecast

Turning to the four-hour chart, we see that the GBP/USD pair formed a double-top pattern at 1.2288 this month. It then managed to move below the neckline of this pattern at 1.2000 on August 5. The pair dropped below the 25-day and 50-day moving averages.

The Relative Strength Index (RSI) has moved to the oversold level while the Oscillator has moved below the neutral level. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1750. This price is slightly below the year-to-date low of 1.1760.

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The GBP/USD exchange rate attempted to extend its month-long recovery last week, but was unable to reach a new high. It could now head into a period of neutrality with a bearish bias unless the action-packed economic calendar provides catalyst for new progress. The GBP/USD pair fell to the 1.2050 support level at the beginning of this week’s trading, and the rebound gains last week brought it to the 1.2277 resistance level.

There were multiple signs last week that a significant moderation in US inflation was approaching, albeit not enough to dissuade the Federal Reserve (Fed) from its hawkish policy stance, leading to continued interest rate risks that also limit the factors for the sterling. “The weak inflation reports have caused some understandable relief to risky assets and downward pressure on the dollar,” Michael Cahill, FX analyst at Goldman Sachs, wrote in a research briefing on Friday. “That is likely to extend a bit given the light calendar going forward and the possibility that this week’s FOMC meeting minutes will include some discussion about the FOMC’s apparent desire to slow the pace of advances soon.” But we don’t expect that to be a lasting relief.”

Data last week indicated that every official measure of US inflation was either slowing or declining in July, while separate measures of producer prices and import costs also surprised to see declines in the recent period.

Meanwhile, a New York Fed survey showed expectations of future inflation falling on all horizons last month, and a significant University of Michigan survey indicated that expectations fell on all but the longer horizons.

The problem for sterling and the dollar lies in things like staffing costs per capita, which rose 10.8% annually in the second quarter after a 12.6% increase previously and in a result that wage growth rates have slowed to a decline from their highest levels in recent decades. Taken together with the rise in long-term expectations combined with the recent reduction in market expectations for the Fed funds rate, these factors keep US inflation and interest rate risks to the upside while limiting the pound-dollar rate in its ability to recover.

“Wednesday’s retail sales report is the most popular data in this week’s calendar,” says Kevin Cummins, chief US economist at Natwest Markets. Thursday’s weekly jobless claims also require more attention, in light of the recent improvement. “We expect the minutes to confirm the additional price hike to a restrictive position that remains in place for this year,” he added. Accordingly, “we doubt that the FOMC will send any clear message whether the expectations for a rate hike in September are 50 basis points or 75 basis points.”

What’s next for GBP/USD?

A lot about how the GBP/USD price will move in the coming days is likely to be determined by a busy economic calendar that includes several very important dates for both the Pound and the Dollar. Accordingly, Juan Manuel Herrera, an expert at Scotiabank, says: “The energy crisis and the cost of living crisis indicate that there are economic headwinds awaiting the British economy, and this will limit the ability of the pound to advance.”

“The top of the range this week coincided with a test of the major resistance at 1.2275 and failure here indicates the risks of the cable returning to the 1.20 region. We notice a major support at 1.2080 in the short term.”

The UK economic outlook remains weak. The Bank of England still expects a recession to start in the fourth quarter of 2022, although the risk is closer. Employment figures will be closely scrutinized on Tuesday for clues about labor market resilience and for insight into the trend in wage growth, both of which are influential when it comes to the matter is the outlook for the Bank of England (BoE) interest rate policy. Wednesday’s UK inflation numbers are the most important for the BOE and GBP monetary policy in the short term, and this time there is uncertainty about how the market is likely to respond to upside or downside surprises.

Sterling dollar forecast:

• The GBP/USD currency pair is closest to testing the psychological support 1.2000.
• It may increase the bears’ control over the trend.
• It will prepare to test stronger support levels, the closest to them are currently 1.1975 and 1.1880, respectively.

On the other hand, and over the same time period, moving towards the resistance levels 1.2145 and 1.2300 will be important for the bulls, and in general, I still prefer to sell the GBP/USD from every bullish level.

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During the recent trading sessions, the bears tried to stop the pace of losses for the GBP/USD currency pair at the psychological support level of 1.2000 so as not to increase the currency pair’s suffering. We see that it is subject to more collapse, especially if the US inflation numbers come today. The improvement will prompt the US Federal Reserve to raise interest rates strongly until the country’s record inflation is contained.

What is expected for the sterling dollar pair in the coming days?

Sterling is likely to fall to its lowest level since the pandemic crash as the US Federal Reserve’s rate hike path continues to outpace that of the Bank of England according to Societe Generale analyst Olivier Korber. Korber wrote in a note that the Bank of England’s latest recession warning combined with rising expectations of another 75 basis point interest rate hike in the US could put sterling at risk of falling below the $1.20 support “in the very near term”.

• The British currency rose in late July on expectations that the Federal Reserve would move away from aggressive tightening.
• The recovery was cut short this month as US officials sounded more hawkish and the BoE delivered a bleak economic outlook that overshadowed a 50bp rate hike.
• The pound has fallen by 10% since the beginning of 2022 so far against the dollar, ranking third among its peers in the Group of Ten, as the path of raising interest rates by the Federal Reserve has exceeded that of the Bank of England.

The analyst added, “Recession fears are now easing in the United States, and the debate has begun about whether there will be a second consecutive increase for the Fed by 75 basis points.”

Swaps referring to Fed meeting dates were priced back to levels indicating another 75 basis point increase in September is likely to come after stronger-than-expected jobs data on Friday. If the bearish outlook for sterling continues, Korber expects the pound to fall to between $1.14 and $1.20 within a month.

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For three trading sessions in a row, the bulls are moving at the price of the USD/JPY currency pair to the upside until the US jobs numbers are announced tomorrow, Friday. This will be the strongest driver of the US dollar pairs for this week’s trading. The rebound gains for the dollar-yen pair brought it to the level of 134.55 before settling around the level of 133.85 at the time of writing the analysis. The rebound came from the support level 130.40, which confirmed the break of the bullish trend.

Expectations of a US interest rate hike continue to support record gains for the US dollar in the currency market. In this regard, James Bullard, President of the Federal Reserve Bank of St. Louis, said he favored a strategy of raising interest rates “from the front,” and reiterated that he wanted to end the year at 3.75% to 4% to tackle the hottest inflation in four decades. “We still have some ways to go here to get to tight monetary policy,” Bullard added in an interview with CNBC. “I’ve argued now that with the hotter inflation numbers in the spring, we should get to 3.75% to 4% this year.” Deciding whether you want to do this at a particular meeting, or another is a great question. I loved the front loading. I think it enhances our anti-inflation qualifications.”

All in all, Fed chairs, including Pollard’s speech this week, emphasized that US inflation at a 40-year high has not yet slowed, and pushed against the perception that the US central bank was heading towards a less aggressive phase of monetary tightening. Last week, Federal Reserve Chairman Jerome Powell cited the FOMC’s forecast that the Fed will raise US interest rates to 3.4% at the end of the year and 3.8% in 2023.

“We’re going to have to see compelling evidence via the headline and other measures of core inflation that all come down convincingly before we’re able to feel like we’re doing enough,” Bullard added. He later added that the Fed may have to keep interest rates “higher for a longer period” to see a broad-based slowdown in price growth.

Financial markets are pricing rate cuts as soon as the first half of 2023, and some investors took Powell’s comments at last week’s press conference as a sign that the Fed could soon become less aggressive. Overall, the Federal Reserve raised US interest rates by 75 basis points for the second consecutive meeting, and Powell said that another increase of this size would be possible in September. He did not provide specific guidance for the future and said that future price increases will be data-driven and will be determined in one meeting after another.

Bullard also said he agreed with Powell’s view that the United States is not in a recession, noting that strong job growth is more convincing than the negative two quarters of GDP seen by some as a sign of slackening. Bullard said he expects growth in the second half of the year. “We’re not in a recession right now,” he added, and “with all the job growth in the first half of the year, it’s hard to say there was a recession.”

Forecast of the dollar against the Japanese yen:

Before the announcement of the number of US jobless claims and US trade balance figures. On the daily chart below, the USD/JPY price is trying to return to the vicinity of the general bullish trend. This may happen if the bulls move in the currency pair towards the resistance levels 134.60 and 136.00, respectively. On the other hand, and as I mentioned in the recent technical analyses, it will be important to break the psychological support level of 130.00 to turn the general trend into a bearish one.

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The Euro also gained some momentum from the ECB Governing Council members holding an unscheduled meeting on Wednesday to discuss recent issues related to bond movements in the Eurozone.

The US Central Bank announced a stronger-than-expected interest rate hike and calmed Jerome Powell, governor of the bank. The strong demand for buying the US dollar, and the price of the currency pair EUR/USD gained momentum to rebound upwards, starting from the support level 1.0359 to the level of 1.0507 and settled around the 1.0445 level at the same time. The bears still have the strongest control over the performance of the most popular currency pair in the forex trading market.

The Euro also gained some momentum from the ECB Governing Council members holding an unscheduled meeting on Wednesday to discuss recent issues related to bond movements in the Eurozone. The market has taken this as a sign that the European Central Bank is serious about dealing with the possibility of an unregulated bond market in the Eurozone, which supports the euro exchange rates.

The developments come after bond yields in “peripheral” eurozone economies – such as Italy and Greece – rose sharply in response to recent indications by the European Central Bank that it will raise interest rates in July and again in September. Notably, peripheral bond yields rose faster than those of core eurozone countries, such as Germany and France. This widening of the eurozone yield spread worries the eurozone and markets as it revives memories of the eurozone debt crisis in early 2010.

For his part, a spokesman for the European Central Bank said: “The Board of Directors will hold a special meeting to discuss the current market conditions.” The market reaction was positive as it indicated that the ECB will not sleep and enter another crisis. The European Central Bank is expected to work quickly in developing tools to ensure that the eurozone market continues to function, thus reducing the existential risks to the euro. Commenting on this, Elias Haddad, chief currency analyst at CBA says: “EUR/USD rose towards 1.0500 and spreads around the eurozone narrowed sharply amid expectations that the European Central Bank will announce measures to deal with the increasing retail risks in the bond markets. Sovereignty in the Eurozone.

The intervention comes as the euro extends its 2022 lead against the pound, but falls further toward parity against the US dollar.

ECB Governing Council member Isabelle Schnabel said before that that the ECB had “no limits” in its commitment to defending the eurozone, citing concerns that euro zone spreads are trending upwards. Schnabel also said the European Central Bank was ready to launch a new instrument to counter any “disorderly” jump in borrowing costs for weaker eurozone economies.

The main concern for investors since the European Central Bank said at its policy meeting last week that it will raise interest rates in July is how it will intervene to tackle retail financial markets. “Our commitment is stronger than any specific tool,” Schnabel added. Our commitment to the euro is our anti-fragmentation tool. This commitment has no limits. Our track record of intervening when needed supports this commitment.”

Today’s meeting could test the ECB’s resolve. If the European Central Bank presents a compelling roadmap to contain the bond markets, the euro exchange rates may rise further, but any disappointment could be painful.

According to the technical analysis of the pair: the recent rebound, the EUR/USD price did not break out of the bearish trend, and it is still stabilizing below the 1.0500 support. This confirms the extent of the bears’ control over the trend. The recent losses moved the technical indicators towards oversold levels, but the Euro lacks strength factors so far. Investors’ balancing of the US central bank’s announcement and the ECB’s recent steps may give some hope of an upward correction. The closest support levels for the currency pair are currently 1.0390 and 1.0280, respectively.

On the daily chart, the bulls move to breach the 1.0770 resistance, which will support the rebound strength to the upside, otherwise the bears will continue to control. There are no important European economic data, and the focus will be on the US session data, where jobless claims will be announced, the Philadelphia Industrial Index and US housing data will be announced.

A state of instability dominates the performance of the EUR/USD currency pair since the start of trading this week. The performance may remain so until the announcement of the monetary policy update of the European Central Bank, and then finally the US inflation figures, which have a strong reaction to expectations of tightening Federal Reserve policy. Recently, the US job numbers came in support of the path of raising US interest rates strongly during 2022. The price of the euro dollar is settling between the support level at 1.0652 and the resistance level at 1.0752, and it is settling around the level of 1.0705 at the time of writing the analysis.

Financial market bets have cut halfway towards calling for a historic half point rate hike by the European Central Bank as soon as July. Investors priced 37.5 basis points into the ECB’s tightening rate by next month’s meeting, suggesting there is a 50% chance of a half percentage point increase, which would be the first since 2000. That rise was already achieved by September, assuming the deposit rate remains flat on Thursday, with a 134 basis point rate hike expected by the end of the year. It is a far cry from the start of the year when inflation was expected to be temporary, and investors were betting on just 15 basis points of tightening this year.

The European Central Bank came under tremendous pressure after inflation in the region extended to a record high in May, climbing to more than four times the central bank’s 2% target. While ECB officials have long indicated that a quarter-point increase is coming, some Governing Council members have suggested that a larger increase is possible. On Wednesday, Robert Holzmann said record high inflation strengthens the case for a half-point hike in July, which will also support the euro exchange rate.

Sensing the urgency, analysts at Bank of America last week forecast that the European Central Bank will raise interest rates by half a point in July and September, followed by two quarter point increases in the last two policy meetings of the year.

According to the technical analysis of the pair: Do not change my technical view of the currency pair. The discrepancy between the future of raising interest rates from the Federal Reserve and the European Central Bank will remain a negative influence on any gains for the EUR/USD pair, not to mention the continuation of the Russian-Ukrainian war and its negative repercussions on the Eurozone. To turn the general trend of the EUR/USD to the upside, the bulls broke through the resistance levels 1.0795 and 1.1000, respectively.

On the downside, if the bears move towards the support levels 1.0625 and 1.0540, the bullish expectations will be affected, and the bearish look will return again. The euro will be affected today by the announcement of the growth rate of the euro zone, and the absence of the economic calendar from important and influential US economic data.

As the performance of last week, the USD/JPY currency pair has been moving since the start of this week’s trading in a narrow range with an upward bias. It settled around the 129.50 level at the time of writing. It got close to breaching the 130.00 psychological resistance again, which supports the bulls’ dominance. So far, the US dollar is still the strongest with expectations of raising US interest rates throughout 2022. The results of the US economic data are still in favor of the policy of Jerome Powell and his team in aggressively raising interest rates until the US inflation is brought under control, which reached its highest level in 40 years.

US retail sales rose 0.9% in April, a strong increase that underscores Americans’ ability to continue increasing spending even as inflation remains at an almost 40-year high. For its part, the Ministry of Commerce said that the increase was driven by the increase in sales of cars, electronics, and restaurants. Even adjusting for inflation, which was 0.3% month over month in April, sales increased. Gas prices fell slightly last month, curbing inflation, after rising in March in the wake of the Russian invasion of Ukraine.

Consumers are providing crucial support to the economy even after a year of soaring gas, food, rent and other necessities. The US economy contracted in the first three months of the year, but consumer and business spending was still rising at a healthy pace. “Never bet the American consumer has always been a good saying,” Paul Ashworth, chief US economist at Capital Economics, a consultancy, said in a note to clients. “Despite the price hikes that are weighing on their purchasing power, it now appears that the American consumer is acting on their own to keep the global economy afloat.”

Tuesday’s report also showed that sales in March were revised much higher, to 1.4% from 0.7%. As a result, spending that month rose after adjusting for inflation, which rose to 1.2% as gas prices rose. The review notes that the economy has likely shrunk by less than the 1.4% reported last month. Strong employment, rapid wage increases, and a healthy level of savings have – on average – boosted consumers’ financial health, despite a sharp 8.3% increase in consumer prices in April from a year ago. The increase was just below the four-decade high reached in March.

Economists are still watching closely to see if consumer spending can continue to outpace inflation. As slow spending would hinder the growth of the economy. While that could lower inflation, it could also threaten to push the economy into recession.

For lower-income Americans, inflation takes a bigger toll and forces many people to adjust their spending patterns. However, the strong sales figures in the government’s report are also impressive given that retail sales cover only a third of consumer spending, with the rest going to services such as travel, haircuts, and healthcare. Airlines and hotels also posted strong sales as more people take trips after a two-year travel delay.

Overall, the continued strength of consumer demand, fueled by a strong labor market, is a major reason the Federal Reserve has accelerated its efforts to tighten credit and cool the economy. By doing so, Fed Chair Jerome Powell hopes to bring down inflation without causing a recession. Accordingly, the Federal Reserve raised its US short-term interest rate by half a point at its policy meeting earlier this month, double the usual increase. Powell also indicated that the Fed is likely to make the fastest rate hikes in 33 years to stem inflation.

According to the technical analysis of the pair: There is no change in my technical view, as the breach of the 130.00 psychological resistance will be of special importance for the bulls to further control the performance of the USD/JPY currency pair, thus preparing to move towards stronger ascending levels. The policy of the US Central Bank, in addition to the extent of investors’ appetite for risk or not, will constitute the supporting factors for investors to move the price of the currency pair in one of the two directions. On the daily chart, the break of the support 126.80 will be important in changing the general trend to a bearish one.

The GBP/USD exchange rate collapsed further into oversold territory on the charts last week, but it still risks further losses that could pull it back to 1.2255 or lower in the coming days. Rising Chinese economic growth risks support the dollar before the latest inflation report in the United States of America. The pound sank further against nearly all the G20’s crosses last week. This is in part to a roughly 2% drop in the pound-dollar exchange rate, which fell below 1.25 to enter the new week’s trading above the rounded figure from 1.23 after a collapse to the 1.2260 level, the lowest in nearly two years.

Last Thursday’s candid assessment by the Bank of England (BoE) of the difficulties likely awaiting the British economy and their constraining implications for interest rate expectations were the dominant drivers of sterling’s declines although the dollar also rose.

Friday’s payroll data showed a moderation in wage growth in the US in a potentially dampening result to inflation expectations during April, while Wednesday’s Federal Reserve decision also appeared as a calming effect on US bond yields and the dollar. However, the inflationary economic effects of the EU’s faltering move towards a Russian oil embargo and global market volatility have kept the dollar ahead. The US currency is likely to benefit from growing concerns about the Chinese economic outlook.

This is after Chinese Premier Li Keqiang was widely reported at the weekend that he had called for intensified efforts by the authorities to save jobs and support families as they grapple with the fallout from coronavirus containment measures in major urban centers including Shanghai and Beijing.

The deteriorating economic background and the government’s increasing willingness to support Chinese growth pose a downside risk to the renminbi and an upside risk to the USD/CAD pair, which in turn indicates continued headwinds for many other currencies relative to the greenback from early this week.

Accordingly, some analysts are of the opinion that “GBP/USD could remain weak this week due to dollar strength and concerns about the British economy amid the energy price shock. There is downside support for the GBP/USD at 1.2112.”

International headwinds are putting an additional strain on the pound-dollar exchange rate ahead of Wednesday’s release of US inflation data for April and Thursday’s release of UK first-quarter GDP numbers, both of which are highlights in the coming week for the dollar and the pound, respectively.

According to the technical analysis of the currency pair: The bearish expectations for the price performance of the GBP/USD currency pair are open to the extent that the pessimism situation highlighted by the Bank of England recently remained. Accordingly, the psychological support of 1.2000 may be a legitimate target to continue the momentum of the US dollar from the current factors and from the important economic data for the currency pair this week. On the other hand, according to the performance on the daily chart, the GBP/USD pair will need at least a 500-pips bounce from the current levels to reverse the current downtrend.