GBP/USD Forex Signal: Triple Bottom Pattern Forms – 06 March 2023
The outlook of the pair is bullish, with the next key level to watch being at 1.2145. The stop-loss of this pattern is at 1.1960.
The GBP/USD price bounced back above the important support point at 1.1923 as the US dollar index (DXY) pulled back slightly. It rose to a high of 1.2040, the highest point since March 1. The pair is reacting to a pushback by the Bank of England (BoE) on rate hikes.
The GBP/USD price rose slightly after the UK made progress on Brexit after Rishi Sunak made a deal with the European Union on Brexit. There is a likelihood that the prime minister will have the votes he needs to pass the legislation.
The next important catalyst for the pair will be the upcoming budget reading by Jeremy Hunt. In it, he will likely focus on fiscal responsibility, drawing lessons from last year’s mini-budget crisis. In its first statement, he unveiled 55 billion in savings in a bid to offset the 45 billion pounds in giveaways by Liz Truss.
The pair will also react to the actions by the Bank of England (BoE). Data in the futures market show that the BoE will increase interest rates to 4.6% by December. A month ago, the futures market was expecting interest rates to peak at 4%. In his pushback last week, Andrew Bailey hinted that the bank was nearing its peak of its rate hike cycle. Therefore, there is a sign of divergence between the Fed and the BoE.
There will be no economic data from the UK and the US on Monday. Therefore, traders will focus on the latest China Party Congress that happened during the weekend. In it, officials set their GDP target to 5%, meaning that no significant stimulus will be needed.
On Tuesday, the GBP/USD pair will react to the upcoming statement by Jerome Powell, the Federal Reserve chair.
The GBP/USD pair has formed strong support at 1.1917, where it struggled to move below on March 2, February 27, and Feb 17. It has formed a triple-bottom pattern whose neckline is at 1.2145 and crossed the 50-period moving average. The MACD and signal lines have made a bullish crossover pattern while the Relative Strength Index (RSI) has moved above the neutral point at 50.
Therefore, the outlook of the pair is bullish, with the next key level to watch being at 1.2145. The stop-loss of this pattern is at 1.1960.