The British pound remains under pressure due to the challenging economic situation in the United Kingdom. Recent economic data confirms this, which naturally affects demand for the sterling. Weak manufacturing and retail sales figures have raised concerns about the state of the economy and increased the likelihood of further interest rate cuts by the Bank of England.
From a technical perspective, the chart displays the formation of a "Head and Shoulders" reversal pattern, characterized by a neckline at 1.3380. This pattern is most clearly visible on the daily line chart.
Technical Setup and Trade Idea:
- The price is trading below the middle line of the Bollinger Bands, as well as below both the SMA 5 and SMA 14, which have previously crossed, indicating an acceleration in the pair's decline.
- RSI is below the 50% level and continues to fall.
- Stochastic is in the oversold zone.
The pair is likely to fall first toward 1.3380, and then, following the completion of the reversal pattern, drop further to 1.3225, confirming a "Double Top" pattern. The level of 1.3473 may serve as a potential entry point for selling the pair.
