On Friday, the dollar extended growth but already for a different reason. No more news about the escalation of the Ukrainian conflict came, and the greenback continued the bull run already because investors' expectations about the pace of the Federal Reserve's rate hikes had changed. There seems to be no doubt that the interest rate will be lifted by 75 basis points in September. These are further rate hikes that raise questions. On Friday, investors were finally convinced that rate increases would continue until the end of the year. Moreover, the interest rate would be raised at a faster pace, which is clearly seen from the yield on 30-year government bonds, which jumped to 0.920% from 0.195%. By the end of the year, the interest rate could be hiked by as much as 175 basis points, President of the Federal Reserve Bank of Minneapolis Neel Kashkari said in an interview on Friday. Such a hawkish statement boosted the greenback. The price may pull back slightly today due to the empty macroeconomic calendar.
GBP/USD plunged by about 250 pips at the end of the previous week. The quote approached the swing low of the medium-term trend.
The RSI is moving in the oversold zone on the 4-hour chart, indicating the overheating of short positions on GBP. The indicator came as low as 17.65.
The Alligator's MAs are moving down on the 4-hour chart, in line with the current sluggish movement. A crossover of the Alligator's MAs has ended on the daily chart, signaling the continuation of the current trend.
Outlook
Due to the overheating of short positions on GBP and 1.1760/1.1780 support, a technical correction could take place. If the assumption is accurate, the quote may well head towards 1.1900.
If the bearish trend goes on, speculators are likely to ignore the oversold signal and push the price to 1.1760.
In terms of complex indicator analysis, there is a mixed signal due to a slowdown in the bearish trend. Medium-term and intraday bearish sentiment remains strong. Technical indicators signal to sell the pound.
