The British Pound managed to recover recently against the US Dollar, but it looks like GBP/USD may fail to gain pace in the near term.
GBP/USD Weekly Analysis – British Pound Remains Under Pressure
· The British Pound moved down during the past three days against the US Dollar, and currently remain under a bearish pressure.
· There is a monster contracting triangle pattern formed on the daily chart of GBP/USD, which might cause another downside move.
· A break below 1.2200 might call for further losses in the near term.
GBP/USD Technical Analysis
The British Pound recently recovered towards the 1.2320 level against the US Dollar, but failed to hold the gains. It found sellers near the 23.6% Fib retracement level of the last decline from the 1.3055 high to 1.2093 low.
However, the most important factor, which is stopping an upside move in the GBP/USD pair is a monster contracting triangle pattern formed on the daily chart. We can clearly see from the chart that the pair struggling to break triangle resistance and currently testing the support.
If the British Pound sellers manage to break the triangle support area, and there is a daily close below 1.22, then we may witness more losses in the near term.
Trade Idea – If you are looking to enter a sell trade, then consider it with a break below the triangle support and a stop of around 35-40 pips.
This week, there were a few releases in the UK, which were mostly disappointing. The most recent one was the Retails Sales by the National Statistics. The market was waiting for an increase of 0.4% in the total receipts of retail stores in Sep 2016, compared with the previous month.
However, the result was negative, as there was no change in the retail sales in Sep 2016. The yearly change came in at +4.1%, which was lower compared with the forecast of +4.8%. The report stated that “Average store prices (including petrol stations) fell by 1.1% in September 2016 compared with September 2015; there were falls in average store price across all store types, except textile, clothing and footwear stores and petrol stations. This is the smallest decrease since August 2014.”
Overall, the British Pound buyers hardly have any reason to take the pair higher, which exposes it for a break below 1.2200 in the near term.