The US elections generated a rollercoaster on the USD pairs, with the GBPUSD falling over a hundred pips points in the last twelve hours. The US elections uncertainty continues with the possibility now of a Democrat White House and a Republican Senate.
For the GBPUSD pair, other variables come into play in the days and weeks ahead. One is the EURGBP indecision around the 0.90 level. Both bulls and bears may rest assured that unless the EURGBP breaks away from that level, the GBPUSD pair remains in a range around 1.30 as well.
The Federal Reserve of the United States and the Non-Farm Payrolls are also due this week on Thursday, respectively, on Friday. If the Fed eases as the Reserve Bank of Australia did Tuesday, the GBPUSD may find some bids. However, the Fed comes after the Bank of England, and the market expects more easing in the form of an expanding quantitative easing program.
Bank of England, Brexit, US Elections – Uncertainties Mount
Tomorrow, the Bank of England is expected to increase the QE program with GBP150 billion or even more. The more the Bank of England will ease, the bigger the impact on the GBP will be.
Brexit remains another source of uncertainty for GBPUSD traders. Yesterday, the United Kingdom and the European Commission announced that there is still no common ground on fisheries, days after some progress appeared possible.
GBPUSD Bearish Rectangle
In the meantime, all these factors led to the GBPUSD to move in a rectangular pattern that might act as a continuation one. Naturally, the 1.30 level is pivotal and sits right at 50% retracement of the rectangle. Some may even say that there is scope for a bearish flag on the GBPUSD with the flag given by the bearish rectangle.
Bears may want to wait for a break and close below 1.2850 before selling the pair. At the same time, the invalidation for the short trade should be the 1.30, while for the target the rectangle’s length assures a proper risk-reward ratio.
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GBPUSD Price Forecast
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