GBP/USD Price Prediction: Who Will Sort Out Their Problems First?
- GBP/USD price action continues to grind higher within a rising wedge pattern.
- Whoever can sort out their economic mess first, UK or the US, will come out on top for their respective currency.
GBP/USD has been moving within an ascending wedge pattern formation for past twenty trading sessions. As a result, price action has been grinding higher, currently running at its fourth consecutive week in the green. It appears despite the growing Brexit concerns and lack of solid positive developments, GBP continues to hold its ground versus the USD.
In terms of the Dollar’s under-performance, it has picked up downside pace since the Federal Reserve’s last rate decision. They did hike, however clearly signaling a slowdown from their initial planned hiking cycle intentions. Ever since, Fed speakers including the chair continue to stress how monetary policy can go either way. Elsewhere, it worth keeping in mind the ongoing government shutdown, this also capping USD upside.
The next sustained trend is going to be dictated by who essentially sorts out their economic problems first. GBP will come out on top if the UK is able to avoid a no-deal scenario with the EU and become more politically stable. However, both of these scenarios are still very much up in the air for now. On the other hand, if there can be an end to this partial government shutdown, then the Dollar will likely win the battle.
Trade Analysis – GBP/USD
In terms of trade observations for GBP/USD, shorts still look attractive, but patience will be required. Technically, if playing out to the textbook this daily ascending wedge pattern is subject to a breakout to the downside. The price remains within consolidation mode, after six straight weeks of hard selling.
Look for shorts around the 1.2800-50 region, where the upper trend line of the pattern structure mentioned is tracking. Bulls have faced rejection on each time the price has met with the line, but still manages to push north for now.
An initial downside target of 1.2500 is eyed, where a demand zone can be observed. This would be should the lower acting trend line give way. Further south, a move back down towards the 1.2000 price region may be seen. GBP/USD last traded down here in January 2017.
For another leg higher, GBP/USD needs to see a weekly close above key resistance eyed at 1.2785. This would likely see a fast move back towards 1.3000, last traded here mid-November 2018, during the heady downside pressure at the time.
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