The pair will likely keep falling after it moved below the triangle pattern.
Set a sell-stop at 1.3040 and set a take-profit at 1.2970.Add a stop-loss at 1.3120.Timeline: 1 day.
Set a take-profit at 1.3120 and a take-profit at 1.3200.Add a stop-loss at 1.3050.
The overall strength of the US dollar pushed the GBP/USD price below a key support level. The pair dropped to a low of 1.3042, which was the lowest level since March 16th. It has fallen by 1.72% below the highest point in March.
Strong US Dollar
The GBP/USD pair declined because of the strength of the US dollar. The dollar index crossed the important resistance level of 100 on Wednesday as the American yield curve continued inverting.
The difference between the 10-year and 2-year bond yields declined to the lowest level in years. As a result, analysts expect that there will be a recession in the next few months as the Fed embraces a more hawkish tone.
Minutes published by the Fed showed that most members of the FOMC believe that it is necessary to accelerate the pace of rate hikes. As a result, they expect that the bank will hike in the remaining six meetings of this year. Some of those hikes are expected to be 0.50%. This explains why government bond yields have risen to the highest level in over three years.
The GBP/USD has declined because analysts expect that the Bank of England (BOE) will lag the Fed in rate hikes. While the bank has already implemented three rate hikes, Andrew Bailey has warned that a pause is necessary as the bank reflects on the past hikes. He also expects that the economy will suffer because of the ongoing war in Ukraine.
The economic calendar will not have any major events from the UK and US today. Therefore, investors will continue to reflect on the Fed minutes. In the UK, Halifax will publish the latest house price index (HPI), which is expected to show that prices held steady in March. The US will also publish the latest initial jobless claims data.
The GBP/USD pair moved below the important support level at 1.3110 as the US dollar strength prevailed. This was an important price since it was at the tip of the symmetrical triangle pattern. It has moved below the 25-day moving average. It also tested the crucial support level at 1.3047, which was the lowest point on March 29th.
Therefore, the pair will likely keep falling after it moved below the triangle pattern. If this happens, the next key support level to watch will be at 1.3000.