GBP/USD Faces Correction Amid Potential Reversal Zone Identified
GBP/USD Retreats from Highs, Holding Ground Below 1.2600 Level in Early European Trading
GBP/USD, after reaching its highest level since May 10 near 1.2570 earlier on Friday, is currently struggling to gain upward momentum and has entered a consolidation phase during the European trading hours. The pair has edged lower, defending minor bids below the 1.2600 level. The US Dollar is maintaining its recovery gains, supported by a cautious market sentiment. The focus remains on the upcoming US Consumer Price Index (CPI) data and the Federal Reserve's decision.
On Thursday, the US Dollar faced significant selling pressure as the US Department of Labor's weekly report indicated an increase in Initial Jobless Claims to 261,000 for the week ending June 3, up from 233,000. This data highlighted looser labor market conditions, leading to a retreat in the 10-year US Treasury bond yield, which had previously seen gains following the unexpected rate hike by the Bank of Canada. Consequently, the US Dollar Index declined by more than 0.7%, reflecting the negative impact of the jobless claims data on the currency's performance. Meanwhile, major US stock indexes closed higher.
In the European session, US stock index futures are trading mixed, and the UK's FTSE is showing modest gains. If risk sentiment does not continue to dominate market dynamics in the second half of the day, investors might refrain from betting on sustained weakness in the US Dollar ahead of crucial inflation data and the Federal Open Market Committee (FOMC) policy meeting next week. This caution could limit further upward movement in GBP/USD.
Considering Thursday's significant rally, market participants may also opt to secure their profits, resulting in a downward correction for GBP/USD. Notably, in the H4 timeframe, a recognizable Gartley Harmonic pattern has emerged, indicating that the price is currently in a potential reversal zone. This pattern could present an interesting option for traders to consider.
GBP/USD, after reaching its highest level since May 10 near 1.2570 earlier on Friday, is currently struggling to gain upward momentum and has entered a consolidation phase during the European trading hours. The pair has edged lower, defending minor bids below the 1.2600 level. The US Dollar is maintaining its recovery gains, supported by a cautious market sentiment. The focus remains on the upcoming US Consumer Price Index (CPI) data and the Federal Reserve's decision.
On Thursday, the US Dollar faced significant selling pressure as the US Department of Labor's weekly report indicated an increase in Initial Jobless Claims to 261,000 for the week ending June 3, up from 233,000. This data highlighted looser labor market conditions, leading to a retreat in the 10-year US Treasury bond yield, which had previously seen gains following the unexpected rate hike by the Bank of Canada. Consequently, the US Dollar Index declined by more than 0.7%, reflecting the negative impact of the jobless claims data on the currency's performance. Meanwhile, major US stock indexes closed higher.
In the European session, US stock index futures are trading mixed, and the UK's FTSE is showing modest gains. If risk sentiment does not continue to dominate market dynamics in the second half of the day, investors might refrain from betting on sustained weakness in the US Dollar ahead of crucial inflation data and the Federal Open Market Committee (FOMC) policy meeting next week. This caution could limit further upward movement in GBP/USD.
Considering Thursday's significant rally, market participants may also opt to secure their profits, resulting in a downward correction for GBP/USD. Notably, in the H4 timeframe, a recognizable Gartley Harmonic pattern has emerged, indicating that the price is currently in a potential reversal zone. This pattern could present an interesting option for traders to consider.
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