GBPUSD is back at the 1.30 after a difficult week. The EU Summit that just ended last week had two important points on its agenda – the Brexit and coronavirus.
As such, all the rumors and pieces of news that came out of Brussels sent the GBPUSD on a rollercoaster. However, the pair held the ground around the 1.30 level and now prepares for the next move towards 1.32.
The 1.30 remains pivotal for the weeks ahead until the U.S. elections. Any news out of the U.S. front that may indicate a change in the polls may also trigger a sharp move on the pound.
U.K. Inflation Data This Week
Inflation comes out this week, and it always represents an extra factor that contributes to volatility. The market expects inflation to double from the previous release, reaching 0.4% when compared with 0.2% last time. This is the annual data and reflects the trust the market has in the Bank of England’s ability to fight deflation. If we look at other jurisdictions (e.g., ECB), the Bank of England seems to have more success in pushing inflation away from the zero level. However, any miss on Wednesday’s data will be a disappointment for the GBPUSD pair.
GBPUSD Technical Analysis
From a technical perspective, the pair seems to form a triangle as a continuation pattern. In fact, the triangle might have broken at the start of this trading week.
Such consolidation patterns typically form as continuation patterns, like pennants. If that is the case, the current breakout points to a move towards 1.32 and beyond, as suggested by the pennant’s measured move. At that point, cable meets dynamic resistance.
To trade it, bulls might want to buy just above the 1.30 level with a stop loss and 1.2850 and a take profit around the 1.3250 area. Also, it might be wise to book partial profits as the trade progresses, as swings remain possible due to U.S. elections and Brexit.