FOMC Meeting Could Lead to GBP/USD Sell-Off
GBP/USD Trade Plan
DERBYSHIRE GB / JUNE 8th, 2023 - This is the GBP/USD trade plan and contains the go to market strategy.
Trade Opportunity
The value of the pound has increased since March, but this is mainly due to the dollar becoming weaker, rather than the pound becoming stronger. The dollar weakened during the recent banking and debt ceiling crisis in the United States and as that risk fades, strength could return which would see the value of the pound fall.
The market is expecting the Federal Open Market Committee (FOMC) to raise interest rates in July, but there is a growing belief that they could do so at the meeting next week. This is because the labour market in the United States has been stronger than expected. If the FOMC does raise rates next week, it could lead to increased demand for dollars, which could cause the value of the pound to fall. This could be a good opportunity for traders to sell the GBP/USD.
Technical Evaluation
The GBP/USD is currently trading in the $1.24 area which is:
close to the short-term (50-day) average, also at $1.24
above the medium-term (100-day) at $1.23
far above the long-term (200-day) average at $1.20
Research as documented in the recent playbook suggests the value of the GBP/USD at this time is to stay above the $1.18 area and below $1.25 area.
GBP/USD Trade Plan
The GBP/USD trade plan is to sell from levels above 1.24 with stop loss above 1.26 and profits to be considered in the 1.23 area. Trade plan expires on the 13th of June when the US CPI data is released or before if the fundamental situation changes.
Gavin Pearson
Retail trader since 2008
Specialises in forex G7 currencies
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