At the auction on June 14-18, the GBP/USD currency pair collapsed. However, here we must admit that the British pound was not alone, as all major currencies ended the trading of the last five days with a quite strong decline. The main reason for such an impressive strengthening of the US dollar against all its main opponents was the tougher-than-expected rhetoric of the Federal Reserve System (Fed), following its two-day meeting in June, as well as more optimistic new forecasts for the US economy.

However, the main reason for the strengthening of the USD was the statements of Fed Chairman Jerome Powell regarding inflation, which can be fixed above the Fed's target level of 2% for a longer time. It implies the need for the Fed to move to tighter monetary policy methods and raise the main interest rate earlier. Such moments regarding the main world currency are always perceived with special interest and influence of market participants. Although almost all Open Market Committee members believe that a rate hike will not occur until mid-2022, this factor is already beginning to be embedded in the price of the US dollar.

Weekly

The fall of the GBP/USD pair by 2.13% leaves no doubt that the upward trend for the instrument is over, and now the pair will have to change its price direction, namely, a bearish scenario. However, often after such strong declines, the exchange rate should be adjusted. At the time of writing, the pound/dollar pair is trading near 1.3811, and the 1.4000 mark looks like a good option for a corrective pullback. However, this level is very far away, and such strong technical values as 1.3900, 1.3930, and 1.3960 may not allow the pair to go higher. It will be extremely important for the downside players to go down the support level of 1.3670, which has repeatedly restrained the price movement in the south direction.

Daily

The earlier assumptions about a possible reversal of the exchange rate were fully confirmed on the daily chart. After consolidating in a relatively narrow range, the bulls were unable to resume the rise of the quote, which their opponents did not fail to take advantage of. As a result, there was a shaped collapse with a breakdown of 50 MA, 89 EMA, and an exit down from the Ichimoku indicator cloud. If the pair can pull back to the broken lower border of the daily cloud, which is located at 1.3916, this will be a good option for opening short positions on the pound/dollar pair. The rest of the trading ideas will be discussed in more detail in tomorrow's article on this instrument when smaller time intervals will be considered. In conclusion, it is worth noting that the current week will be extremely busy for GBP/USD. The most important events will be the Bank of England's decision on rates and the speech of Fed Chairman Jerome Powell to the US Congress with the semi-annual report on monetary policy.