GBP/USD Trading within a falling wedge

Feb 14,2020

Following the previous report on GBP/USD, the pair defying the bearish breakout from the 1.2900 psychological level as it now trades back above the 1.3000 handle. However, overall price action since the delivering announcement of Brexit in mid-December, which formed the evening star then, now continues to show a possible falling wedge formation indicating a bears dominance in the reign.

In terms of MACD, it shows bearish persistence momentum falling to the hands of billions, although too early to determine a golden-cross. Price action remains trading above both the 18EMA and 50EMA; however, the pair is expected to consolidate between the 1.3180 high and 1.2800 low.

From the fundamental point of view, not much support was provided by the UK economy itself on this week’s rally from the pound. Instead, the currency was mostly supported by the change in preference of riskier assets from the euro into the pound, with pair of EUR/GBP hitting its December 2019 low at 0.8300. The downside risk and weak economic outlook towards the Eurozone kept the pound strong despite the ridiculous hike in the dollar.

For the week ahead, high fluctuations can be expected from the British pound, with a set of economic data from the region such as wage & jobs data early of the week; and the Purchasing Managers surveys later that week. However, without breakout confirmation from the consolidation phase mentioned above, the pair will continue its trading within the region.

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GBP/USD Trading within a falling wedge

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