GBP/USD Forex Signal: Rising Wedge, Double-Top Form

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Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2200.
• Add a stop-loss at 1.2350.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.2340 and a take-profit at 1.2435.
• Add a stop-loss at 1.2250.

The GBP/USD pair dropped slightly on Thursday morning as US bond yields retreated and stocks and the US dollar rallied. It was approaching the psychological level of 1.2300, which was lower than this week’s high of 1.2360.

Risk-on sentiment

A risk-on sentiment continued in the market as traders placed their bets that the banking crisis was ending. On Wednesday, most bank stocks rose after UBS, the giant Swiss bank, announced that Sergio Ermotti, would become its CEO. He will be tasked with integrating Credit Suisse, the second-biggest bank in the country.

As a result, stocks continued rallying, with the top indices like the Dow Jones and the S&P 500 rising by more than 50 basis points. Similarly, bond yields pulled back, with the 10-year falling to 3.55% and the 30-year dropping to 3.76%.

This price action happened even as the US published strong consumer confidence and pending home sales numbers. Consumer confidence rose to 104.2 in March as Americans shrugged off bank failures and elevated inflation. Pending home sales jumped by 0.8%.

There will be no economic data from the UK on Thursday. As such, the GBP/USD pair will be affected by economic figures from the US. The Bureau of Labor Statistics (BLS) will publish the latest jobless claims numbers. Economists expect that initial claims rose from 191k to 196k.

The other important figure will be the final estimate of the country’s GDP data. Economists expect that the economy expanded by 2.7% during the quarter. This figure being the third estimate will likely have no major impact on the pair. The Federal Reserve will also publish its reserve balances with Federal Reserve banks.

Perhaps, the most important data to watch will be the personal consumption expenditure index, which will come out on Friday.

GBP/USD technical outlook

The GBP/USD pair has formed two bearish patterns on the 4H chart. It has formed a double-top pattern whose neckline is at 1.2198 and its upper part is at 1.2350. In technical analysis, this is a popular bearish pattern.

Further, the pair has formed a rising wedge pattern, which is shown in black. It has also been stuck at the first resistance of the Woodie pivot point. Therefore, the pair will likely resume the bearish trend as sellers target the key support level at 1.2200.