Dear fellows, today I am going to provide you with an insight about one of the most traded currency pairs in the FX industry – GBP/USD – the cable. During the past weekend, the tension has been increased as the parliament of Cameron has been deciding about UK’s fate in the European Union. What came as a decision was a national referendum that is going to take place in June giving the British people the opportunity to choose whether their country is going to stay in the Union or leave it. Financially the decision would have a huge impact on the UK economy as well as the European one. However, until then there is plenty of time and let’s see what is the technical picture for the GBP/USD pair.
I will provide an analysis on a weekly time frame as this is where the fundamentals are best represented by the price action as well as the reliability of the technical structure is one of the highest.
On a weekly basis we spot a strong downtrend that has been already confirmed by a ross-hook pattern and after the last weekend, the bears solidified their dominance over the pair. Currently, the prices are located close to the 1.4100/1.4000 resistance but based on the strong downtrend pattern we expect this level to be easily pushed and the cable should continue to rapidly depreciate. The uncertainty of the fundamental situation is making it just worse and our expectations are that the value of the British currency will be depreciated towards the 2009 lows around 1.3500. Both fundamental and technical patterns suggest for a solid bearish pressure and until the prices hit 1.3500 we do not see any support zones that could trigger a buying interest especially with such a high fundamental risk involved.
Technically, only a push above 1.4600 may be a signal for bullish reversal but, for now, this looks more like a fantasy than a technical scenario.