For a couple of weeks now, neither the bulls nor the bears have had a complete control of the GBP/USD, as the pair has been caught in a horizontal channel pattern. Currently, it is teasing the bottom line of the pattern. Will it maintain the pattern?
Recently, a number of poor economic data has caused the decline of the pound against its major counterparts. U.K’s manufacturing PMI report for July gave a reading of 45.4 against the expectations of the market at 48.6. And, the market has not really absorbed the interest rate decision by the BOE, which was released earlier today. All the same, it seems the pound is not happy with these recent developments.
As earlier mentioned, technical analysis on the GBP/USD reveals it is trading within a horizontal channel. If the pair continues with its downward move, it may encounter support at the bottom of the pattern, at 1.5450. On the other hand, if the pair starts recovering its losses, it may rally until it retests the top of the pattern, at 1.5730.
As the pair is approaching the bottom of the pattern, long-term traders who were short in the pair should continue holding onto their positions. However, short-term traders should rather wait for the earnings season to complete before having a fresh call on the pair.
DISCLOSURE & DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.