While the GBPUSD currency pair has experienced an upward trend since late last year, recent times have seen a shift towards consolidation. The trading range for this pair has tightened, revealing a fascinating technical pattern during a crucial week of economic data releases.
The UK economy’s robust performance has led to a reconsideration of expectations for rate cuts by the BoE. Simultaneously, the resilience of the US economy has prompted a re-evaluation of expectations for rate cuts in March. However, the pivotal event of the week hinges on the PCE Price Index, an inflation measure that has the potential to reshape market sentiment regarding the trajectory of US monetary policy for the rest of the year.
Technical
The uptrend was broken down on the daily chart, but the pair failed to gain enough bearish traction to enforce a downtrend. Instead, the price action consolidated, forming a symmetrical triangle which could trigger a breakout in either direction in the coming days.
The 25-SMA (green line) currently offers resistance at 1.2706. While this resistance holds, the dynamic support of the triangle could be vulnerable to a breakdown, which could push the pair below the 50-SMA (blue line) toward 1.2544. The 100-SMA (orange line) could then come under the spotlight near the Fibonacci midpoint and golden ratio, which are established at 1.2432 and 1.2339, respectively.
However, if the 25-SMA gets breached, it could signal that the bulls are regaining the upper hand. A breakout from the dynamic resistance could lead to convergence with 1.2849. At this level, the price could either pivot to retest the breakout level or continue its ascent toward higher resistance at 1.2947.
Summary
The GBPUSD currency pair is in a consolidation phase in a symmetrical triangle formation ahead of the US PCE data later this week. This data release holds the potential to trigger a breakout in either direction, potentially enforcing a new directional trend for the currency pair.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
