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GBPUSD Long-term Trend Remains Down

11/2/2022 1:49 PM

The GBP/USD pair is trading at 1.1485 ahead of the US Federal Reserve's decision on monetary policy at 20:00 (GMT+2).

According to the CME FedWatch Instrument, there is an 85.5% chance of a 75.0 basis point hike to 4.00%. However, experts believe that in a subsequent press conference, officials may hint at a slowdown in the tightening or even a temporary suspension of hawkish moves due to fears of creating too serious pressure on the labor and real estate markets. If the regulator justifies investors' expectations, we can expect the US dollar to strengthen in the medium term and the long-term downtrend in the GBP/USD pair to continue updating the October low.

Tomorrow, traders will follow the outcome of the Bank of England meeting. The British regulator is likely to continue the current rate and adjust the interest rate also by 75.0 basis points to 3.00%, in which case the influence of the US monetary policy on the trading instrument will be limited, and the pound will be able to strengthen its positions. On Wednesday, the October macroeconomic statistics will be released: the composite index will likely remain unchanged at 47.2 points, and the business activity index at –47.5 points. If the actual value exceeds the forecast and the Bank of England justifies investors' expectations, then the GBP/USD pair will be able to continue an upward correction with the target in the resistance area of ​​1.1768–1.1695.

The long-term trend remains downward. At the moment, an upward correction is developing with the target in the 1.1768–1.1695 area, and if sellers hold it, then the decline is likely to continue with a renewal of the October low at 1.0940.

The medium-term trend is upward. Last week, market participants broke through target zone 3 (1.1391–1.1355), and the next target was zone 4 (1.1751–1.1715), while the key trend support moved to 1.1237–1.1196. If the price is correct in this area, it will be possible to consider new instrument purchases with the first target at 1.1640.

Resistance levels: 1.1695, 1.1768, 1.2060. | Support levels: 1.1370, 1.1170, 1.0940.

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