The GBP/USD currency pair dropped to new weekly lows of about 1.2600 before making a slight rebound to end UK session at about $1.2605. The pair is now targeting key trendline support around the 1.2600 level after the US Consumer confidence missed expectations.
The currency pair has traded on a relatively sideways pattern over the last four weeks during a period that was dominated by major developments in the UK politics and changes in the US trade tensions.
GBP/USD Fundamentals Overview
The US consumer sentiment index missed expectations of 98 basis points with 97.9 points to dent what had been a great day for the greenback from a macro-economic perspective.
Earlier on Industrial Production beat expectations of 0.2% with 0.4% MoM growth to add pressure to the Pound Sterling. Retail sales also outperformed with 0.5% MoM growth versus 0.4% forecast.
Earlier on the Bank of England governor Carney had issued a dovish statement with no comments on monetary policy. The UK is preparing for Boris Johnson to replace Theresa May as Prime Minister.
GBP/USD Technical Analysis (the 240-min Chart)
From a technical perspective, the GBP/USD currency pair appears to be trading within a sideways channel, which suggests that the pair could be gearing towards a breakout.
The bulls will be targeting short-term trading opportunities at around 1.2682 and 1.2760. On the other hand, the bears will hope for a continuation of the current pullback towards 1.2538 and 1.2479.
The Relative Strength Index indicator shows that the pair is approaching the oversold region, which suggests that the current support could hold firm ahead of next week.
GBP/USD Technical Analysis (the DAily Chart)
In the daily chart, the GBP/USD currency pair appears to be on a bearish wedge, which comes following a period of sustained bullish run that ended with a double-top reversal pattern.
The main trendline support appears to support the current consolidative pattern towards the end. The bulls will be more optimistic going into next week as the pair appears well positioned for a major rebound.
In summary, the GBP/USD currency pair appears to enjoy a short-term bullish bias but the bears could retake control if the current trendline supports is breached.