GBPUSD has been consolidating on the short-term time frames as traders are hesitating to take large positions ahead of this week’s top-tier releases from the UK. Price made higher lows and lower highs, creating a symmetrical triangle on the 1-hour time frame.
Price is moving up to test the resistance around 1.4550 and might be due for another bounce towards the support at 1.4450. The 100 SMA is below the 200 SMA so the path of least resistance is to the downside.
Stochastic is already in the overbought area so buying pressure might fade soon. RSI is on middle ground and is still heading up, which means that bulls are still in control of price action for now.
Top-tier catalysts include the release of UK jobs data and CPI readings towards the middle of the week, as these could provide support for the BOE’s shift to a less hawkish stance. In their previous Super Thursday, policymakers downgraded growth and inflation forecasts, leading traders to speculate that they won’t see a UK rate hike this year.
As for the US, data came in stronger than expected on Friday, as headline and core retail sales both beat consensus. Import prices also chalked up a smaller than expected fall, which suggests that dollar strength hasn’t been so damaging yet.
US banks are closed for the President’s Day holiday today so the low liquidity during the New York session could pave the way for a strong breakout in either direction. The chart pattern is around 350 pips in height so a sustained move could last by the same amount.
A downside break from 1.4450 could lead to a selloff until 1.4100 while an upside break past 1.4550 could spur a rally until 1.4900.
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