As noted in previous materials, yesterday's main event was the report of the Chairman of the Federal Reserve System (Fed) of the United States on monetary policy before the relevant Congressional committee. Investors had hoped that Jerome Powell would continue to use the more hawkish rhetoric after the Fed's June meeting. However, this did not happen. The head of the Federal Reserve again called the sharp spike in inflation a temporary factor and noted that the Fed would not rush to review its monetary policy. In other words, the rate hike will not occur until mid-2022, and only if the favorable economic recovery that is currently observed continues. At the same time, it is possible that rates in the United States can be raised only in 2023. Naturally, such rhetoric could not serve the US dollar well and support the US currency.
Today at 13:30 London time, reports on the indices of economic activity in the manufacturing sector and the service sector will be received from the United States. PMI indices for manufacturing activity and the services sector will be released from the UK at 09:30 (London time). However, the main event for the British pound will be tomorrow, when the Bank of England will announce its decision on interest rates, the volume of the asset purchase program, and publish an accompanying statement to these decisions. We will talk about this in more detail tomorrow, right on the day of releasing the most important news for the British currency.
Daily
The daily chart clearly shows how volatile GBP/USD was trading yesterday. After falling to 1.3860 (and this level was repeatedly mentioned as extremely strong), the bulls for the pound found the strength to reverse the situation, level out all losses, and finish trading on June 22, albeit with a slight increase. A characteristic moment of yesterday's trading is the closing of the session within the daily Ichimoku cloud. However, the bears seemed to have done everything possible to prevent this from happening. So, yesterday's candle with a very long lower shadow can set up an optimistic mood and continue the upward scenario. However, it is worth noting that after the strong fall that occurred last week, all this is still being considered as part of the course adjustment. If the players want to increase and can continue to raise the rate, they need to break through the red line of the Ichimoku Tenkan indicator and bring the price up from the daily cloud, closing trading above the key level of 1.4000. But this is not all that they have to do.
As you can see, the blue Kijun line and the blue 50 simple moving average passes slightly above 1.4000, which also need to be broken. Thus, the strong technical area of 1.4000-1.4028 is again in the foreground, which similarly acts as a strong resistance. In the case of a true breakdown of this area, you can and should try to buy in the expectation of further strengthening of the exchange rate. If this does not happen and bearish candlestick patterns begin to appear in the selected area on this or lower timeframes, this will signal opening sales. The bearish course of trading on GBP/USD will also be indicated by an alternate breakdown of the support levels of 1.3860 and 1.3784. So far, sales seem to be the main trading idea for the pound/dollar pair. However, tomorrow, after the decision and comments of the Bank of England, the situation may radically change. Perhaps it is better to take your time and take a wait-and-see attitude.