GBPUSD is the second-biggest loser in today’s trading next to AUDUSD. Following the BOE’s warning of a potential no-deal Brexit, the currency pair is down by 0.25% as it trades around 1.2254.
As Brexit negotiations resumed this week, reports cited BOE Governor Andrew Bailey warning banks to prepare contingency plans if the UK and EU do not come into agreement. Consequently, this caused a few investors to panic and sell GBPUSD.
Today, the Construction PMI report for May is due to be released. It is expected to print a significant improvement from 8.2 in April to 29.5 for May. Better-than-expected data could help push GBPUSD higher while a disappointing reading could weigh on it.
On the daily time frame, it can be seen that GBPUSD is testing resistance at the 100 SMA. In fact, yesterday’s candlestick closed as a shooting star. When you enroll in our free forex trading course, you will learn that this candlestick pattern is widely considered as a bearish reversal signal.
A closer look at the 1-hour time frame also shows that GBPUSD got rejected twice at the 1.2600 handle. Consequently, a double top chart pattern has formed. The currency pair is already trading below the neckline support at 1.2555. This could indicate that there may be enough sellers in the market to push the currency pair at its May 29 lows at 1.2290.
However, it’s worth pointing out that GBPUSD still has some room to trade lower before testing its trendline support around 1.2520. If the currency pair finds support at this level, it may just mean that there are still enough buyers in the market that could possibly push GBPUSD to its recent highs at 1.2610.More content