GBP/USD – Long term consolidation?

Who will blink first?

The next few weeks will be interesting in GBPUSD with the pair seeing the currencies of two central banks intent on tightening going head to head.

This is perhaps why it has entered into broad consolidation with the pair once again failing to make a new low, despite breaking back below the 200/233-day SMA once more.

The pair rotated strongly off 1.3750 over the last 24 hours but it’s already seeing some support. While 1.3750 falls just short of the 50 fib on the 4-hour chart, another push higher would take it into really interesting territory, with the cluster of moving averages and 50/61.8 fib region being a massive test.

A move above here could see consolidation continue, with 1.39 being a big test above here and then 1. 40 . A move above here would see if break out of the consolidation phase and potentially make much larger gains.

Ultimately it may come down to which central bank is keener to tighten or, if the risks mount up, which will blink first. Until then, we may have to endure plenty more consolidation, at which point the moving averages on these longer time frames become less useful.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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