- The GBP/USD pair could develop a more significant swing higher after retesting the median line (ML).
- The FOMC could bring high volatility and sharp movements on Wednesday.
- The currency pair escaped from a significant Falling Wedge pattern signaling an upside reversal.
The GBP/USD price rallied today, trading at 1.2074, below 1.2082 today’s high. The price jumped higher as the Dollar Index seemed quite bearish.
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DXY’s more profound drop should force the greenback to depreciate versus its rivals. Technically, the currency pair moved sideways in the short term, trying to accumulate more bullish energy before jumping higher. Also, the price action escaped from a primary upside reversal pattern so that it could develop a more significant leg higher. Still, don’t forget that the rebound could be temporary as the outlook remains bearish in the median to the long term.
Fundamentally, the British Pound is bullish as the UK economic data came in better than expected on Friday. The Flash Services PMI came in at 53.3 points above 52.9 points, expected to signal further expansion, while the Flash Manufacturing PMI was reported at 52.2 points above 52.1 points. In addition, the Retail Sales and the Gfk Consumer Confidence also reported positive data.
On the other hand, the US data came in mixed. The Flash Services PMI dropped to 47.0 points signaling contraction, while the Flash Manufacturing PMI was reported at 52.3 points above 52.0 points expected.
Today, the Uk CBI Industrial Production came in at 8 points below 13 expected. Tomorrow, the US CB Consumer Confidence, Richmond Manufacturing Index, and the New Home Sales could bring more action. Though, the most important event of the week is represented by the FOMC. As you already know, the FED is expected to increase the Federal Funds Rate to 2.50%. This high-impact event could bring high volatility and sharp movements in both directions.
GBP/USD price technical analysis: Bullish reversal
As you can see on the h1 chart, the rate failed to stabilize below the downtrend line signaling strong upside pressure. It has escaped from a major Falling Wedge pattern signaling a new leg higher. It was trapped between the 1.1925 and 1.2033 levels in the short term.
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After registering only, a false breakout above the 1.2033 – 1.2056 area, the GBP/USD pair returned to test the median line (ML) of the ascending pitchfork, which stands as a dynamic support. From the technical point of view, a valid breakout above 1.2056 may signal further growth towards the ascending pitchfork’s upper median line (UML).
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