The GBP/USD currency pair short-term consolidation continued on Friday in a triangle formation helping the pair to hold steady within the 1.2685 level. The currency pair is currently on a pullback after its most recent rally took it to above 1.2780 for the first time since May 21.
The pair is pegged between the 100-hour and the 200-hour moving average lines, which supports the case of short-term consolidation. This could lead to a potential downward breakout given the shape of the triangle.
GBP/USD Fundamentals Overview
From a fundamental perspective, the GBP/USD currency pair is trading at the back of what has been a major day in the UK. While geopolitical issues around Brexit won’t go away any time soon, traders had the opportunity to analyze the GBP/USD currency pair from a different perspective.
On Friday morning, the UK GDP numbers showed MoM growth of 0.5%, which was in line with expectations. The YoY growth also matched analyst estimates with 1.8% growth. However, total business investment missed the forecast of 0.5% with 0.4% growth on a QoQ basis.
GBP/USD Technical Analysis (the 60-min Chart)
From a technical viewpoint, the GBP/USD currency pair appears to have returned to its previous trading range of about 1.2650-1.2720. The pair made a bearish breakout from this range in the middle of this month. Another bearish breakout could happen soon following the current consolidative pattern formation.
As such, the bears will be looking to pounce on any downward movements by targeting profits at around 1.2657 or lower at 1.2612. On the other hand, the bulls will target profits at around 1.2720.
GBP/USD Technical Analysis (the Daily Chart)
In the daily chart, appears to be experiencing strong bearish pressure following a double-top reversal pattern early last year. The gains registered at the start of this year did not materialize to a full recovery which shows the strength of the bearish bias.
In the long-term, the bulls will target profits at around 1.2800 or higher at 1.3015 while the bears will be hoping that the bearish pressure persists by targeting long-term profits at 1.2581 or lower at 1.2380.
In summary, the GBP/USD currency pair appears well poised for a continued consolidation around the 1.2670 level but a breakout could be just around the corner.