Forex Depth Analysis: GBP/USD

Dollar reign could come to an end as GBP looks to recuperate!

Sterling hit a three-month low versus the dollar on Wednesday after the Bank of England's quarterly report showed inflation staying above target for sometime to come and economic growth slowing sharply.

The dilemma facing the Bank was illustrated by a UK jobs report earlier in the session, which showed the number of people claiming unemployment benefit rose for the third month running while average earnings growth posted a surprise jump. Analysts say the two conflicting forces could limit the scope for future interest rate cuts, potentially further hurting the economy and thus sterling.

The following technical analysis gives us a detailed lookout on what is expected to happen to GBP/USD

The buying point is at 1.9449; based on a break of standard error channel middle line.

• Fibonacci 61.8% is the take profit at 1.9534
• Fibonacci 38.2% is the stop loss at

The selling point is at 1.9340; based on a break strong support level.

• Previous support is the take profit at 1.9211
• Fibonacci 23.6% is the stop loss at 1.9438

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of MACD line to the signal line and breaking of the zero level. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in an uptrend.

Momentum is very important to understand the strength of the market and as we see on the graph it is in a bullish direction. The Stochastic oscillator crosses %D line with a break of 20% level and continues to go higher.

* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.

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