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

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1850.
• 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 exchange rate is hovering near its lowest level since March 2020 as the US dollar makes a strong comeback. The pair dropped to a low of 1.1745 on Monday, which was about 17.80% below the highest point this year.

US dollar makes a comeback

The GBP/USD price has come under intense pressure in the past few weeks because of the substantially strong US dollar. The dollar index rose to $109, which is a few points below its highest point in more than 20 years.

This rally accelerated after the latest hawkish statement by Jerome Powell and other Fed officials like Neel Kashkari, Charles Evans, and Mary Daly insisted that it was too early to declare victory on inflation.

Most Fed officials who talked at the Jackson Hole Symposium noted that the bank will continue hiking interest rates in the coming months. Analysts expect that the bank will hike by 0.50% after rising by 150 basis points in the past two meetings. Also, they also believe that rates will stay at high levels for some time.

The GBP/USD pair also remained under pressure as concerns about the UK economy continued. Last week, the country’s energy regulator decided to increase the energy price cap by 80% to 3,549 pounds as natural gas prices soared. Sadly, analysts expect that prices will continue rising in the coming months.

In a statement last week, analysts at Citigroup warned that the country’s inflation will rise to 18.3% in January. The Bank of England sees inflation rising to over 13% while Goldman Sachs expects that prices will rise to 15%.

Therefore, there is a likelihood that the UK will go through a recession soon, which will put the Bank of England in the difficult position of hiking during a recession.

GBP/USD forecast

The GBP/USD price continued its bearish trend as the US dollar continued gaining. It was trading at 1.1745 on Monday morning, which was slightly below the important support at 1.1769. This price was the lowest level on July 14. It has moved below the 25-day and 50-day moving averages.

The pair has also formed an inverted cup and handle pattern. In price action analysis, this pattern is usually a bearish sign. Therefore, the pair will likely continue falling as sellers target the next key support at 1.1650.

Ready to trade our daily Forex signals? Here’s a list of some of the best Forex trading platforms to check out.

The pair will likely have a bearish breakout as sellers target the first support of the pivot point at 1.1700.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.1700.
• Add a stop-loss at 1.1850.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.1840 and a take-profit at 1.1900.
• Add a stop-loss at 1.1750.

The GBP/USD currency pair was in a tight range on Thursday morning as market participants waited for commentaries by Jerome Powell and Andrew Bailey at the Jackson Hole Symposium. It was trading at 1.1795, which was slightly above this week’s low of 1.1720.

Jackson Hole Symposium

The Federal Reserve and the Bank of England have embraced a more hawkish tone this year as they fought the soaring inflation. The BoE has hiked interest rates in all its meetings since December while the Fed has increased rates by 225 basis points. In their most recent meetings, the two hiked by 50 and 75 basis points, respectively.

There are signs that these rate hikes are having a negative impact on the respective economies. Data published by S&P Global on Tuesday showed that the manufacturing and services PMIs declined sharply in July.

Therefore, the GBP/USD price will likely show some volatility during this week’s Jackson Hole Symposium. The two central bank governors will provide more details about the status of rate hikes and whether they will continue hiking.

Analysts expect that the Fed will hike rates by 0.50% and then shift to smaller increases afterward. On the other hand, the BoE will find it difficult to hike rates as the economy goes through substantial challenges. The BoE expects that inflation will rise to 13% this year. In a report this week, analysts at Citigroup predicted that inflation will rise to 18.3%.

The BoE responds to high inflation by hiking interest rates. However, it is unclear whether interest rates will lower this inflation since it will be caused by rising wholesale gas prices.

The GBP/USD pair will react mildly to US economic data that will come out on Thursday. Economists expect the data to show that the country’s economy contracted in Q2.

GBP/USD forecast

The four-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few weeks. It managed to move briefly below the important support level at 1.1760, which was the lowest level in July this year. At the same time, the pair moved below the standard pivot point, the 25-day exponential moving average, and the Ichimoku Cloud.

Therefore, the pair will likely have a bearish breakout as sellers target the first support of the pivot point at 1.1700.

Ready to trade our daily Forex signals? Here’s a list of some of the best Forex trading platforms to check out.

The bears will target long-term profits at around 0.9920 or lower at 0.9770.

Investors’ desire to buy the US dollar and abandon the euro due to concern about a bleak future for the recovery of the euro bloc contributed to the increase in the selling operations of the EUR/USD currency pair. This is with losses that reached the 1.0032 support level, the lowest in five weeks, and closed last week’s trading stable around those losses. The euro is on track to fall 1.7% since last Friday, which would be its worst trading week since July 8. The British pound is on its way to recording its worst week in more than a year and is headed for a 2% drop. This performance of the most famous currency pair in the forex market is on an important date this week with the announcement of the growth rate of the US economy, along with the Jackson Hole Symposium event, which will have a strong reaction to the expectations of raising US interest rates in the remainder of 2022.

In this regard, the President of the Federal Reserve Bank of Lewis, James Bullard, said that he is leaning towards supporting the US interest rate hike for the third time in a row by 75 basis points in September, while Mary Daly, a colleague at the Federal Reserve Bank in San Francisco, said that raising interest rates by 50 Or 75 basis points next month would be “reasonable.” Kansas City Fed President Esther George said she and her colleagues won’t stop tightening policy until they are “fully convinced” that hyperinflation is going down.

Economic Analysis

The EUR/USD currency pair is trading affected by the announcement that the European Union Harmonized Index of Consumer Prices (HICP) for the month of July matches the expected (monthly) change of 0.1% with a reading of 0.1%, while the equivalent (based on annual) in line with 8.9%. The previous HICP index for food, energy and air transport also matched expectations on a monthly (monthly) and (annual) basis. Prior to that, it was announced that the European primary GDP for the second quarter fell from the expected change in the ninth quarter of the year by 0.7% with a change of 0.6%, while the equivalent (on an annual basis) also came less than 4% with a change of 0.6%. 3.9%.

In the United States, initial US jobless claims for the week ending August 12 exceeded the expected claim count of 265K with a lower count of 250K. On the other hand, the continuing claims of the previous week beat the expected figure of 1.438 million with 1.437 million. Prior to that, US retail sales numbers for July beat the expected 0.6% change with a 0.8% change, while general retail sales fell 0.1%, down 0% month-on-month.

Technical analysis of the EUR/USD pair:

In the near term and according to the hourly chart, it appears that the EUR/USD pair has recently completed a bearish breakout from forming an ascending channel. This indicates a significant shift in market sentiment in favor of the bears. Therefore, they will look to extend the current declines towards the 1.0000 support or lower to 0.9945 and on the other hand, the bulls will look to take profits around 1.0112 or higher at 1.0143.

In the longer term and according to the performance on the daily chart, it appears that the EUR/USD currency pair has recently completed a downside breakout forming an ascending channel. This indicates that the bears are trying to control the pair. Therefore, the bears will target long-term profits at around 0.9920 or lower at 0.9770. On the other hand, the bulls will look to see a bounce around 1.0196 or higher at 1.0371.

Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex brokers in the industry for you.

The pair will likely continue falling as sellers target the support at 1.1900.

Bearish View

• Sell the GBP/USD and set a take-profit at 1.1900.
• Add a stop-loss at 1.2150.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2130 and a take-profit at 1.2200.
• Add a stop-loss at 1.2065.

The GBP/USD price came under pressure on Monday morning as investors focused on the strong American jobs numbers. The pair was trading at 1.2070 on Monday, which was lower than last week’s high of 1.2295.

Hawkish Fed After US jobs data

The GBP/USD pair made a strong bearish breakout last week even after the Bank of England (BoE) decided to hike interest rates by 0.50%. This was the biggest rate hike since 1994 and is a sign that the bank is committed to continuing with its battle against inflation.

However, the bank also warned that the UK economy was in danger of moving to a recession in the fourth-quarter of the year. This warning implied that the BoE will likely slow the pace of its interest rate hikes later this year.

The GBP/USD pair also dropped after Nancy Pelosi’s trip to Taiwan. Shortly after the trip, China started drills on how it will finally attack Taiwan. These drills continued during the weekend and analysts believe that China will likely accelerate its invasion plans.

The other main catalyst for the sterling sell-off was the strong American jobs data. According to the Bureau of Labor Statistics (BLS), the economy added over 525k jobs in July, a major surprise because of the recent trends in the labor market. Companies like Microsoft, Oracle, Robinhood, and Netflix have all announced layoffs this year.

The unemployment rate dropped to 3.5% while the participation rate continued rising. Notably, wages continued rising in July even though they are growing at a slower pace than inflation. Therefore, these numbers will likely put pressure on the Federal Reserve to continue tightening.

The key data to watch this week will be the upcoming US consumer and producer inflation data and the latest UK GDP numbers.

GBP/USD Forecast

The four-hour chart shows that the GBP/USD pair was in a bullish trend since July 15th. As it rose, the pair formed an ascending channel pattern that is shown in green. It managed to move below the lower side of the channel after the BOE decision and the US NFP data.

It has dropped below the 25-day and 50-day moving averages and is slightly above the important support at 1.2052, which was the highest point on July 8th. The MACD has also moved slightly below the neutral level. Therefore, the pair will likely continue falling as sellers target the support at 1.1900.

Ready to trade our free daily Forex trading signals? We’ve shortlisted the best Forex trading brokers in the industry for you.

The pair will likely resume the bearish trend as sellers target the important support at 0.6850.

Bearish View

• Set a sell-stop at 0.6920 and a take-profit at 0.6850.
• Add a stop-loss at 0.7020.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.6970 and a take-profit at 0.7060.
• Add a stop-loss at 0.6850.

The AUD/USD price remains significantly below its highest this week as investors reflected on the latest Reserve Bank of Australia (RBA) decision. The pair dropped to 0.6945, which was about 1.40% above the lowest level this week.

US Jobs Data Ahead

The AUD/USD pair retreated after the RBA delivered its August interest rate decision. The bank decided to hike interest rates by 0.50%, meaning that it has increased rates four times this year. This is the most hawkish that the bank has been in decades.

The pair declined as investors worried about the pace of future interest rates since there are signs that inflation is peaking. For example, the price of crude oil has dropped from a year-to-date high of over $135 to less than $100.

Some analysts believe that oil prices will continue falling as OPEC+ hikes production. This is notable since oil is the biggest part of inflation in Australia and other countries. Moreso, the RBA warned that the country’s economy will continue slowing down in the coming months. The RBA will publish its minutes on Friday.

The next key catalyst for the AUD/USD price will be the upcoming US jobs data and statements by Fed officials. This week, officials like Charles Evans of Chicago and Lorretta Meister said that the Fed would continue hiking interest rates even as strains to the American economy remain.

For example, there are signs that the housing sector is slowing after data showed that new and existing home prices dropped sharply in June.

The US will publish the official jobs data on Friday. Economists expect these numbers to show that the country’s economy added fewer jobs in July than in the previous month while the unemployment rate remained unchanged at 3.7%.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair made a strong bearish breakout on Tuesday after the latest RBA decision. The pair managed to move below the lower line of the ascending channel. It also moved slightly below the 25-day and 50-day moving average. The Relative Strength Index (RSI) has moved to the neutral point.

Therefore, the pair will likely resume the bearish trend as sellers target the important support at 0.6850. This is both an important psychological level as well as the lowest point on June 14th.

Ready to trade our daily Forex signals? Here’s a list of some of the best Forex trading platforms to check out.

The pair will likely keep falling ahead of the RBI decision.

Bearish View

• Sell the USD/INR and set a take-profit at 78.50.
• Add a stop-loss at 79.50.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 79.35 and a take-profit at 80.
• Add a stop-loss at 78.50.

The USD/INR price dropped to the lowest level since July 11th as investors waited for the upcoming interest rate decision by the Reserve Bank of India (RBI). It fell to a low of 78.90, which was significantly below the year-to-date high of 80.18.

RBI Decision Ahead

The Indian rupee has done well in the past few days as the strength of the US dollar fades. The currency has jumped by 1.42% from the lowest level this year. The focus among market participants is on the upcoming interest rate decision by the RBI that is scheduled for Thursday this week.

Economists expect that the RBI will continue with its hawkish moves as it continues its battle against inflation. Precisely, they believe that the bank will hike the repo rate by between 35 and 50 basis points. Those at Bank of America expect the RBI to hike by 0.35% while those at Housing.com see the bank raising by 0.25%.

Unlike other major central banks, the RBI is not under intense pressure since inflation is moving in the right direction. The headline inflation dropped to 7.01% in June, meaning that the bank will likely lower its inflation target for the year.

Besides, there are signs that commodity prices are falling, which is a good sign for inflation. For example, the price of crude oil is substantially lower than where it was earlier this year.  Similarly, the cost of key commodities like iron ore, copper, and aluminum has dropped in the past few weeks.

Last week, the Federal Reserve decided to hike interest rates by 0.75%, bringing the total YTD increases to 225 basis points. The RBI has raised by just 90 basis points since inflation pressures are not as significant.

USD/INR Forecast

The four-hour chart shows that the USD/INR price soared to a high of 80.23 in June this year. Since then, the pair has been moving sideways as investors worry about whether the recovery has any more room left. It has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point.

The Relative Strength Index (RSI) has been moving downwards. Therefore, the pair will likely keep falling ahead of the RBI decision. The next key support level to watch will be at 78.50.

Ready to trade our Forex daily analysis and predictions? Here are the best Forex brokers to choose from.

The BTC/USD pair will likely keep falling as bears target the support at 17,000.

Bearish View

• Sell the BTC/USD pair and set a take-profit at 17,000.
• Add a stop-loss at 22,000.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 20,500 and a take-profit at 22,000.
• Add a stop-loss at 18,000.

The BTC/USD pair remained solidly below the important support of 20,000 during the weekend as sentiment waned. Demand for Bitcoin and other risky assets has also struggled as investors price in a more hawkish Federal Reserve. It is trading at $19,100, which is about 41% below the highest point in June this year.

Bitcoin Demand Wanes

The BTC/USD pair has declined sharply as investors worry about the cryptocurrencies industry. There have been important news from the sector. For example, in June, Celsius, a leading cryptocurrency bank announced that it was suspending deposits and withdrawals. The company attributed this situation to the significant pullback of all cryptocurrencies.

Last week, Three Arrows Capital announced that it was filing for bankruptcy. This happened as the company faced significant margin calls from leading exchanges. As a result, this made it the biggest crypto-focused hedge fund to go under. The company lost most of its money when Terra and its ecosystem crashed.

Meanwhile, in a statement, Voyager Digital, a major cryptocurrency exchange, announced that it was suspending withdrawals and deposits. The company is now raising capital to save its business.

Another major news was that BlockFi, once valued at over $4 billion was being acquired by FTX for about $25 million. Without the bailout, the company would have probably gone bankrupt.

Therefore, the BTC/USD pair has dropped sharply as investors continue worrying about their holdings. Most of them are worried about whether their exchanges will be next to suspend withdrawals and deposits.

At the same time, there have been significantly low buyers of cryptocurrencies. Recent data shows that the number of people creating accounts with exchanges has been in a strong downward trend. Volume of Bitcoins traded has also fallen recently. All this happened while the US dollar has maintained a bullish trend.

BTC/USD Forecast

The four-hour chart shows that the BTC/USD price dropped sharply in June. Shortly afterwards, the pair bounced back and retested the key resistance at 21,888, where it struggled to move above. It has now been retreating and is trading at 19,110, which is slightly above last month’s low of 17,623.

The pair has also moved below the 25-day and 50-day moving averages. It has also moved between the first and second support levels of the standard pivot points. Therefore, the BTC/USD pair will likely keep falling as bears target the support at 17,000.

The outlook for the pair is still bearish because of the hawkish Fed and the ongoing challenges in Europe.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0300.
• Add a stop-loss at 1.0522.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.0522 and a take-profit at 1.0600.
• Add a stop-loss at 1.035.

The EUR/USD pair rose in the overnight session as the European energy crisis escalated and after the Fed made its rate decision. The pair rose to a high of 1.0460, which was sharply higher than the intraday low of 1.035.

Fed and ECB Meetings

The ECB held an emergency meeting to address the recent volatility in the European bond market. After last week’s monetary meeting, bond yields of vulnerable countries like Italy and Greece surged. Bond yields usually move inversely to prices. As a result, the spread between the safer German bonds and riskier Italian bonds surged to 2.34%.

In its meeting, the ECB decided to create a new “anti-fragmentation instrument” to address the crisis. While the bank did not offer more details about the instrument, analysts believe that the ECB will continue buying bonds from distressed countries. This will be similar to what it did between 2010 and 2012 when it bought bonds worth 220 billion euros.

The ECB meeting happened on the same day that Russia continued flexing its muscle in the region. The country’s energy company, Gazprom, decided to reduce the gas it pumps to Italy and Germany. The company attributed the decision to technical challenges caused by sanctions. Germany, on the other hand, accused it of being a political move.

This is a notable move since Russia is the biggest supplier of natural gas to Europe. At the same time, the bloc’s natural gas prices have helped push inflation to the highest level on record.

The EUR/USD pair also rose after the Federal Reserve decided to hike interest rates by 0.75% for the first time since 1994. In a press conference, Jerome Powell warned that the bank will likely deliver another 0.75% hike in July this year even after data showed that retail sales slumped in May.

EUR/USD Forecast

The EUR/USD pair pulled back after the hawkish Fed decision. It rose to a high of 1.045, which was higher than this week’s low of 1.035. It has formed an inverted cup and handle (C&P) pattern on the four-hour chart.

The pair also remains below the 25-day and 50-day moving averages. At the same time, the MACD has pointed upwards. The outlook for the pair is still bearish because of the hawkish Fed and the ongoing challenges in Europe. Therefore, the next key level to watch will be at 1.0300.

The pair’s outlook is still bearish, with the next key support level to watch being at 1.0400.

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0400.
• Add a stop-loss at 1.060.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0550 and add a take-profit at 1.0650.
• Add a stop-loss at 1.0.480.

The EUR/USD pair dropped sharply as investors reacted to the hawkish interest rate decision by the European Central Bank (ECB) and the strong US inflation data. It dropped to a low of 1.0475, which was the lowest level since May 19^th.

Fed Decision Ahead

The US dollar strengthened while stocks tumbled after data showed that American inflation was still surging. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation rose from 8.3% to 8.6% in May. This figure was higher than the median estimate of 8.1% and it was the highest level in over 40 years.

The strong inflation data happened mostly because of the rising prices of energy and food prices. The price of most food items like eggs, milk, and meat has jumped by more than 10% in the past 12 months. At the same time, the cost of energy has also jumped sharply. During the weekend, Gass Buddy’s average of gasoline prices jumped to $5 for the first time on record.

These numbers came a day a week after the US published strong jobs numbers. The data revealed that the country’s unemployment rate remained at 3.6% in May as the economy added over 390k jobs. The participation rate remains strong.

Therefore, analysts believe that the Federal Reserve will continue tightening its monetary policy as planned in a bid to fight the soaring inflation. The Federal Open Market Committee (FOMC) will start its meeting this week and deliver a 0.50% hike. Some analysts are even pricing in a 0.75% rate hike.

The EUR/USD also declined as investors focused on the interest rate decision by the European Central Bank. The ECB left rates unchanged and signaled that it will start hiking in the coming month.

EUR/USD Forecast

The EUR/USD pair declined to the lowest level since May 19th after the latest consumer inflation data. It fell to a low of 1.0475 and managed to move below the symmetrical triangle pattern shown in black. The pair has also dropped below the 23.6% Fibonacci retracement level. At the same time, it has moved below the 25-day and 50-day moving averages.

Therefore, the pair’s outlook is still bearish, with the next key support level to watch being at 1.0400. A move above the resistance level at 1.0550 will invalidate the bearish view.

The pound fell against the dollar GBP/USD after US inflation outpaced the Fed’s view of the market. Accordingly, the price of the GBP/USD pair declined significantly, reaching the support level of 1.2301 near its lowest level during 2022. As mentioned before,  expectations will increase in strength to move towards psychological support 1.2000 in the event that the bears move in the currency pair towards the 1.2152 support level. The US dollar against the other major currencies gained strong momentum after official data showed that US inflation rose further during the month of May in defiance of market expectations of easing and with potential implications for Federal Reserve policy (Fed). The Bureau of Labor Statistics reported that US inflation rose to 8.6% last month.

This was after the pace of inflation rose on a monthly basis from 0.3% to 1% in May, which led the annual rate to rise further instead of stopping at 8.3% in April, which is what the markets were looking to see. In addition, and most important of all, the most significant rate of core inflation remained unchanged at 0.6% m/m when it was expected to fall to 0.5%, preventing the annual rate of core inflation from falling.

While that left annual core inflation slower at 6.0% (versus 5.9% expected), the slowdown was driven by underlying effects. All in all, this adds upside risk to our current fed funds rate target.

This comes after several Fed policymakers said they would like to see something along the lines of “clear and convincing evidence” that US inflation is not only declining, but also falling squarely toward the bank’s 2% target level.

Separately, and then on Friday, the University of Michigan’s US Consumer Confidence Index fell to an all-time low while the University of Michigan’s survey of inflation expectations for next year rose from 5.3% to 5.4%. The university said that consumer sentiment fell by 14% from May and continued its downward trend over the past year and reached its lowest value on record, compared to the low reached in the middle of the recession of 1980. All components of the sentiment index declined. In summarizing the results of the survey.

The latest US inflation data is the most bullish for the dollar and problematic for the likes of GBP/USD as it feeds into the ongoing upside risks to the previous market’s expectations for Fed interest rates, which were already revised higher after Friday’s announcement. While month-on-month US inflation gauges have looked on the verge of reversing over the previous months, it is likely that any of those hopes were dashed by Friday’s data, which could only mean permanent risks to a steeper trajectory for US interest rates in months. coming.

According to the technical analysis of the currency pair: The bearish performance of the GBP/USD currency pair this week will important, as the US Federal Reserve will announce a half point hike and the Bank of England will announce a quarter point hike. The hawkish signals from one of the two banks will be supportive of one of the two currencies so far. The downside momentum will remain the strongest, and the GBP/USD gains will be subject to selling again. The closest targets for bears are currently 1.2245, 1.2150 and 1.2000, respectively.

On the upside, the bulls will move towards the resistance levels 1.2540 and 1.2660 respectively to cause a change in the current bearish outlook.