Whenever inflation exceeds 4% and unemployment falls below 5%, the US economy enters a recession in two years.
GBP/USD: technical review
Information is not investment advice
Strategically, the range of 1.3240 to 1.3330 has been capping the upside for GBP/USD since early 2018. That means, currently, the British pound is coming to test the two-year resistance against the USD. Will it break it? The USD has been weak lately, and the last several months saw it mostly lose strength against the GBP. But the British pound is facing Brexit and heavier-than-ever economic pressures because of the troublesome fundamental layout of the UK economy. Noting the expanding downside of the GBP/USD movement area, we may assume that is the GBP doesn’t manage to stay strong against the USD, it may go all the way down to 1.1350 and below to make yet another lower low. That would take months, though, so just keep that as a secondary scenario for the long-term horizon.
Tactically, GBPUSD formed a figure that resembles a head-and-shoulders chart pattern with resistances of 1.3270 and 1.3180. Following the logic of the pattern, we may see further drop down to the support of 1.3015 and even below. However, as the time span of the shoulders is uneven, watch the price dynamic in the coming hours and on Friday to verify the bearish move. The support of 1.3070 is not yet broken – until that happens, the upside stays the primary scenario.
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