“Someone is sitting in the shade today because someone planted a tree a long time ago”
- Warren Buffet
The Pound was on the back foot against the U.S dollar, falling to a 5 month low of $1.2252 on Friday, owing to a surprising interest rates cut by 50 bps to 0.25% from the Bank of England last week to counter the impact of the coronavirus (COVID-19) pandemic on the U.K economy, while lingering EU-UK trade uncertainties weighed down on the cable.
However, the pair managed to bounce back to $1.2345 early in Asian session after the U.S Federal Reserve on Sunday announced a surprise rate cut to 0.25%.
The latest announcement triggered a fresh leg down on the greenback which eventually provided some immediate respite to the Pound Sterling.
Technical outlook -
GBP/USD trying to recover but pointing to further slide in the near term
The Pound slumped to a 5 month low of $1.2250 on Friday before bouncing back to as high as $ 1.2433, recovering almost 200 pips, following Fed announcement on Sunday. Yet, the pair failed to gather further momentum in Asia this morning, before falling back to $1.2340, as of writing.
Corrective setback in wave C of Wave (2) could be nearing soon!!
On an Elliott Wave perspective, the impulsive downward trend from $1.3203 started on 9th March 2020 to $1.2250 on last Friday looks incomplete, the Pound may potential turn south again to $1.2150/1.2190 level before triggering a strong U-turn to the upside!
On the Flipside, a break above $1.2490 would confirmed a bullish reversal and back above $1.3200 level for the Pound.
GBP/USD- Hourly & 10 Mins Charts
Disclaimer: This communication is provided for information and discussion purposes only. Unless otherwise indicated, it does not constitute an offer or recommendation to purchase or sell any financial instruments or other products. AfrAsia Bank does not guarantee or warrant the accuracy, reliability, completeness of the information in this publication