For a couple of weeks now, GBP/USD has been stuck between 1.5450 and 1.5750, as neither the bulls nor the bears have had a complete control of the pair. Currently, the pair is approaching the top of the horizontal channel pattern, which is now acting as a major resistance area.
Positive economic data released on Friday from the United Kingdom steered the good performance of the pound. The PPI for July came in at 1.3% whereas the PPI output remained unchanged for the month. Nonetheless, the June figure was revised down to give a 2.9% reduction on PPI input and a 0.6% reduction in PPI output. Thus, these revisions indicate subdued inflationary pressures in the short term.
As earlier mentioned, technical analysis reveals GBP/USD is trading in a horizontal channel pattern. Immediate resistance is found at the upper line of the pattern, at 1.5750. If it manages to break this level, it may sail up to 1.6000. On the other hand, if it starts trading downwards, it may drop up to the bottom line of the pattern, at 1.5450.
The best case scenario would be to wait for the pair to retest the upper line of the pattern before pulling the trigger. Otherwise, you may be caught on the wrong side of the trade if you decide to enter now.
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.