GBP/USD has been quite impulsive, following the downward trajectory today despite the recent bullish attack with a daily close. After the observance of May Day, today the UK failed to provide strong economic reports to sustain the recent bullish momentum in the pair. Today GBP Halifax HPI report was published with a significant decrease to -3.1% from the previous value of 1.6% which was expected to be at -0.3%. Ahead of the UK Official Bank Rate report to be published this week on Thursday, the weakness of GBP indicates the probability of volatile market momentum in the coming days.
On the other hand, USD has been quite successful to sustain its gains in light of the mixed economic reports on the labor market published on Friday. Today, US JOLTS Job Opening report was published with an increase to 6.55M from the previous figure of 6.08M which was expected to decrease to 6.02M, NFIB Small Business Index report was published with a slight increase to 104.8 from the previous figure of 104.7 which failed to meet the expectation of 105.2 and IBD/TIPP Economic Optimism report was published with an increase to 53.6 from the previous figure of 52.6 which was expected to decrease to 51.3. Moreover, Fed Chair Powell delivered a speech which was quite hawkish in nature that made USD gain further momentum.
As for the current scenario, USD has been the better side of the pair whereas GBP is struggling to meet the economic expectations ahead of the Official Bank Rate report to be published this week. To sum up, USD is expected to have an upper hand over GBP in the long run despite the upcoming market-moving reports and events in the UK which are expected to inject some volatility in the market.
Now let us look at the technical view. The price is currently impulsive with the bearish momentum whereas certain Bullish Divergence is being formed in the chart. As for the current market structure, the price is expected to retrace towards the mean of 20 EMA dynamic level from where it is expected to continue its bearish trend with a target towards the nearest support area of 1.33. As the price remains below 1.3850 with a daily close, further bearish pressure is expected in this pair.
