I received an email from Andrew who wrote; Hi Mario,
How much longer do you think the GBPUSD will remain bearish? Is there anything that might cause a trend reversal soon?
Looking at GBP alone, I suspect that its depreciation will continue for now. This is because the UK’s economy seems like it will weaken further considering the high inflation rate, growing current account deficit, low interest rates and a possibility of further quantitative easing. On top of that, the Gross Domestic Product (GDP) numbers for 1Q 2013 turned out poor, making the GBP decline further in competitiveness.
However, the GBPUSD may still appreciate due to profit-taking and any major events that may cause the USD to weaken.
Personally, I still feel that the USD is pretty strong coupled with the weak GBP. Therefore, I don’t see a trend reversal anytime soon for the GBPUSD.
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