Technical Analysis of GBP/USD
After a nice new year rally that boosted GBP/USD from December’s lows at 1.545 to February’s highs around 1.5916, the pair entered a downward channel following Thursday 9th announcement of the BoE for further quantitative easing. Tuesday’s 14th UK CPI reading at 3.6% caused a bit of a bull market squeeze with the cable reversing its gains after spiking to around 1.5768 in early trading. The broader underlying resumption favours selling with targets at February’s low at 1.5680. The bearish trend line capping the RSI is a further confirmation of the downward trend, with short positions potentially having a higher risk reward ratio as there are more than 400 pips to be made on the downside in contrast to 200 pips on the upside within the current trading channel on the hourly chart. In the alternative scenario that the pair breaks firmly above the channel at 1.5775, further upside could see targets at 1.5820 and 1.5845.
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