GBP/USD to reach upper edge of dominant pattern
Morning outlook - GBP/USD to reach upper edge of dominant pattern
- Due to release of satisfying data on the UK CPI, the Pound got an upside momentum that helped it to cross the monthly R1 at 1.3208 and then continue the surge.
- In the early Wednesday morning the pair even managed to reach the weekly R1.
- Most probably, until a release of information on the UK Average Hourly Earnings the pair will continue to fluctuate around the 1.3310 level.
- Usually, the market reaction on this event amounts to 30-40 basis points.
- This means that if the released data will justify experts’ forecasts, the Sterling might finally reach the upper trend-line of a dominant ascending channel and then make a rebound.
- In the opposite scenario, the pair is likely to slip back to the 55-hour SMA and then continue the downfall.
As it was expected, a mismatch with experts' forecasts on the UK Average Hourly Earnings forced the pair to make a premature rebound and retreat towards the closest combined support level formed by the 100-hour SMA and the monthly R1 at 1.3208.
However, over the last ten hours the exchange rate did not make any significant moves. The reason behind such low volatility is anticipation of announcement of the Official Bank Rate by the Bank of England.
Most probably, this event will lead to quite sharp depreciation of the Pound. In the first hour the downfall might be stopped by a combination of the 200-hour SMA and the weekly PP at 1.3110.
However, then the pair is likely to slip even further, tending to reach the weekly S1 and the monthly PP near 1.2990.