GBP/USD Forex Signal: Pattern Point to Further Weakness – DailyForex.com
The pair will likely keep falling as bears target the key support at 1.3700.
- Sell the GBP/USD pair and set a take-profit at 1.3700.
- Add a stop-loss at 1.3830.
- Timeline: 1-2 days.
- Set a buy-stop at 1.3825 and a take-profit at 1.3900.
- Add a stop-loss at 1.3750.
The GBP/USD pair sell-off that started on Friday accelerated in the overnight session as the US dollar bounced back. The pair declined to 1.3768, which was the lowest level since 1st September. This price was also about 0.90% below the highest level on Friday.
UK Tax Hike
The main topic in London this week is about the proposed 12 billion pounds annual tax rise by the Boris Johnson administration.
The plan will see British citizens and companies pay an additional 1.25% in taxes to help fund the National Health Service (NHS) and retirement. The plan will also introduce a 1.25% tax on dividends.
Some analysts expect that these tax increases will have a modest impact on the economy when they take effect in 2022.
Another top mover for the GBP/USD was the decision by the European Union and the UK to postpone border checks on some goods entering from Northern Ireland. This happened after the ongoing negotiations hit a major stalemate.
On Monday, retailers like Tesco and Marks and Spencer warned about the potential for more supply shortages if the situation was not resolved. This, will in turn affect the country’s recovery.
Meanwhile, data by Halifax confirmed that the country’s home prices are at record highs. The numbers showed that UK home prices rose by 7.1% in August after rising by 7.6% in the previous month. Still, the numbers showed that the price growth was starting to slow down.
The next key catalyst for the GBP/USD price will be the US JOLTS job vacancies data. The numbers are expected to show that the country has more than 10 million unfilled vacancies even after the relatively weak non-farm payrolls published on Friday.
The three-hour chart shows that the GBP/USD pair has been in a relatively bearish trend in the past few days. During this time, the pair moved below the ascending trendline that connects the lowest levels since August 23.
It also moved below the 25-period and 50-period moving averages while the MACD has moved below the neutral level. Notably, it has also formed a head and shoulders pattern. Therefore, the pair will likely keep falling as bears target the key support at 1.3700.
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