Pound dollar has been ranging for 2 weeks now and price has been respectively dancing around 1.22529 (top) to 1.20792 (bottom). Structure is forming a triangle and we are expecting a breakout any time sooner towards the end of the week. From experience lots of traders might have been caught in this consolidation for weeks now and any fundamental release may drive GU crazy in terms of movement.
From our technical perspective normally these structures usually ends up breaking to the downside. However the pairs overall direction is bearish but price has his the monthly support zone so we should expect price to pull back. Check out our Sentiment Data
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WHAT ARE FUNDAMENTALS SAYING?
UK politics add to Brexit jitters; GBP looks to UK GDP
The downward spiral accelerated further – dragging the pair to fresh weekly lows – in reaction to the Financial Times report that the UK PM Boris Johnson was expected to face a confidence vote after lawmakers return from recess. The report further cited a senior 10 Downing Street official saying that if they are forced to hold a general election, it would take place days after the Brexit deadline of October 31.
Meanwhile, the greenback failed to capitalize on its intraday positive move and witnessed some intraday pullback in the wake of a sudden intraday pickup in the shared currency. Adding to this, the US President Donald Trump’s fresh criticism over the Fed’s monetary policy stance further collaborated towards capping any meaningful USD upside and helped the pair to quickly recover around 40-pips from an intraday low level of 1.2495.
The pair ticked higher, albeit remained well within a broader trading range held over the past 1-1/2 week or so as the focus now shifts to the UK economic docket – highlighting the release of prelim GDP growth figures for the second quarter of 2019. This coupled with the release of manufacturing/industrial production data will influence the broader market sentiment surrounding the British Pound and produce some meaningful trading opportunities.
Raymond is a professional currency trader with experience of 4 years trading the financial markets. Certified Risk Manager and Contributor at profxtigers.com
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