Will the GBP be the next to hit parity with the USD?

Mark O'Donnellon 19/07/2022|
2 min read

Traders are watching for the pound to follow the euro parity with the USD The Supertrend Indicator is suggesting that the GBP has the impetus to continue its downward  trend

After the euro made a once in 20 years slide to parity with the US dollar, one might also ask: will the  British pound be the next to cross parity with the American dollar?  

The GBPUSD pair has been consistently in a downtrend since last year. Traders and investors are now on  their watch as technical indicators may show signs of a possible move towards the parity target. 

One of the most used indicators to determine the trend and price movements is the Supertrend  Indicator. This indicator is widely used for trading markets and provides buy and sell signals in a trending  market. As the name suggests, this indicator acts like a moving average or a MACD. A very simplistic way  to use this indicator is to buy whenever the price closes above the green line and sell if the price closes  below the red line considering the current market trend.  

On the daily chart, we can see that the GBPUSD made a rebound at around 1.1800 after it made a fresh  2022 low. 

GBPUSD 1D, with Supertrend Indicator and 200 EMA 

With the use of Supertrend and a 200 EMA period, we can identify that the price is still in favor of  moving further down. The indicator gave the initial sell signal last month for a continuation to the  downside; since then, the price has tumbled even further. With this information, we might expect the  price to continue moving down and possibly hit the parity target. However, if the indicator flips to green,  a possible pullback to the upside before continuing further down may also happen in the short or mid term. If this happens, traders may want to wait for the indicator to give a sell signal before taking a  position.