The GBPUSD is testing the range top that has been in place since early October. I mentioned this area in the last few weekly forecasts.
It’s no secret that the pound sterling has been indecisive of late. The currency is facing many unknowns at the moment, and that’s reflected in the price action since October.
The upcoming BOE decision is the event market participants are likely waiting on before committing one way or the other. Things kick off on November 2 at 8 am EST and conclude with a Governor Carney presser at 8:30 am EST.
However, even if Thursday’s events spur the currency out of its lull, the technicals call for more patience.
We’ve been discussing this terminal pattern for several weeks now. It’s the intersection of ascending channel support from the March low and trend line resistance from the 2014 high.
Here’s the view from the weekly time frame:
It was actually the intersection of channel resistance and the 2014 trend line that triggered the selloff in late September. Given that the GBPUSD is still trading well within these confines, there isn’t enough evidence from a technical perspective to call it one way or the other.
So, regardless of the price action that results from tomorrow’s BOE decision, I’ll remain on the sideline. I don’t want to get caught up in the volatility nor do I see a technical environment conducive to follow through.
For that to change, the pair either needs to close above the 2014 trend line near 1.3440 or below 1.3100. Those are, of course, moving targets given the diagonal nature of the levels in question.
I still maintain the idea that a break from this terminal pattern will set the stage for 2018. It could very well be the turning point for the next leg lower or the catalyst for a continuation of the 2017 rally. Either way, something worthwhile is on the horizon.
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