The foreign exchange market is heading into a busy week, with the Federal Reserve meeting on 15–16 September, followed by the Bank of England’s rate decision on 17 September. This sequence of central bank meetings, rather than individual macroeconomic releases, is shaping the current fundamental backdrop for the pound. Ahead of the decisions from the two major central banks, market participants are likely to remain cautious as they assess the future direction of monetary policy in the US and UK.
GBP/USD Technical Analysis
On the GBP/USD four-hour chart, a pronounced short-term downtrend developed between 21 August and 2 September, pushing the pair towards the green support level at 1.3475. From this low, the price began to recover, forming a rising wedge in which both boundaries slope upwards, although the lower boundary is rising at a faster pace. On 10 September, the price attempted to break below the wedge’s lower boundary, but the move has so far remained within the current market profile, with the price holding between its upper boundary at 1.3545 and the Point of Control (POC) at 1.3515.
If the breakout proves false and the price moves through the profile’s upper boundary, the red resistance level around 1.3570 could halt the advance. If the price does continue lower and breaks through both the POC and the profile’s lower boundary at 1.3500, market participants could turn their attention to the green support level at 1.3475. The RSI + MAs indicator shows readings of 48, 46 and 47, with all three measures sitting in the middle of the neutral zone, making it too early to confirm the breakout.
Key Takeaways
The attempted wedge breakout has yet to develop beyond the profile, while neutral RSI + MAs readings provide no clear indication of the next direction. More pronounced price action in the pair is likely to emerge as the Bank of England’s rate decision approaches.
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