GBP/USD is on the start of a short-term downtrend, after breaking below a long-term trend line resistance seen on its 4-hour time frame. However, the pair is in the middle of a corrective wave forex trading pattern, as it makes its way to test the trend line.
Price is currently moving sideways with a slight bias to the downside. A move lower could lead to a test of the former lows near the 1.6700 major psychological support while an upside break from the small descending triangle pattern could lead to a test of the falling trend line around 1.6800.
Forex Trading and Elliott Wave Forecast
Manufacturing PMI in the UK was slightly weaker than expected, but today’s construction PMI release is slated to show an improvement. In that case, GBP/USD could draw some bids and have enough momentum to go for a trend line resistance test.
On the other hand, a weaker than expected release could keep weighing on the pound. There are no major reports due from the US today, which suggests that the Greenback might react more to forex trading market sentiment and risk aversion.
Traders might also be looking to position themselves ahead of the BOE interest rate decision this week. There are no monetary policy changes expected to interest rates and asset purchases, but forex trading experts foresee that policymakers might be more hawkish this time.
In their previous statement, BOE Governor Carney mentioned that the central bank might look into gradual methods in exiting its easing cycle. A rate hike next year could be possible, depending on how the U.K. economic performance fares. Emphasizing this point could lead to more forex trading gains for the pound against its major counterparts.
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