Potential reemergence of the downward trend
GBP/USD spent most of the first half of May rising in a sharp incline, especially during and immediately following the UK elections on May 7. […]
GBP/USD spent most of the first half of May rising in a sharp incline, especially during and immediately following the UK elections on May 7.
This substantial surge culminated at a 2015 high of 1.5813 in mid-May, topping off the considerable rebound and partial recovery that had been in place since mid-April’s multi-year low of 1.4565.
This partial recovery occurred after a sharp, prolonged downtrend that saw the currency pair drop from a high of 1.7190 in July of last year to the noted April low of 1.4565, a decline of more than 15% within nine months.
In the middle of this May, the US dollar began to reassert its previous strength after a short period of retreat. This resurgence in dollar strength prompted GBP/USD to pullback sharply from its noted mid-May high, back down below the key 1.5500 support level.
In the process of this decline, the currency pair has also dipped below an uptrend support line that represents the rebound from multi-year lows, and re-approached its 200-day moving average to the downside.
As of late May, the US dollar continues to assert its renewed strength and as a result, GBP/USD could potentially see a June reemergence of its entrenched downtrend after the rebound.
With any such revival of the bearish trend for GBP/USD, the next major targets to the downside for the month of June remain at the 1.5250 and then 1.5000 support levels.
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