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FxWirePro: GBP/USD upside correction is not over

After reaching 1.278 area, riding on a weaker USD, the pound is down since yesterday. However, our calculations suggest that this is unlikely to be a resumption of the broader downtrend.

We have already suggested that GBP/USD bounce back presents an opportunity for medium term short entry, however, we expect the correction to be a bigger one with GBP/USD testing 1.3 area.

Further weakness in the Dollar is likely to provide support to the trade, as the Federal Reserve is now widely expected to cut back on interest rates as early as July. The Fed is also expected to reduce the pace of its balance sheet reduction over the course of the next 12 months.

We expect the following area to provide support to GBP/USD - 1.2645, 1.262

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