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#1 18-05-2020 09:54:54

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2855

GBP/USD: how will the recent US unemployment rise affect the pair?

GBP/USD: how will the recent US unemployment rise affect the pair?

The GBPUSD, also known as the "cable", is one of the currency pairs that has rebounded the most in recent weeks. At the height of the virus pandemic, the GBPUSD fell to 1.15, only to rebound to 1.26 in less than a month. As American unemployment continues to rise, many are wondering if this could be the starting point for further moves.

This may indeed be possible. However, at this point, it has shown some reversal trends - a double peak. This trend reflects the inability of the price to break a certain zone, or "resistance". This is due to the fact that volatility in the currency market continues to create price uncertainty, and traders don't know where the rate should be. In this case, it is the 1.26 level for the pair, where the markets reversed after hitting it twice.

Implications of a double top

A double top looks like the letter M. Also, it has a measured movement. Technical traders draw a horizontal line that defines the two tops and use another line to measure the distance. Double tops are powerful inversion schemes, but they do not work all of the time. The risk is that the price will just accumulate energy, having trouble breaking through the horizontal resistance on its first attempt.

In other words, the possibility of the market forming an upward triangle should not be ruled out. In fact, the first steps in the formation of an ascending triangle almost always show a double top.

The above chart shows that from mid-March to today, the price is contained within a range. Uncertainty dominates, and traders are in wait-and-see mode.

The GBPUSD is also affected by news related to Brexit, which is another flow driver in relation to the current coronavirus pandemic. Later in the year, there is the US presidential election. Investors are positioning themselves in the US markets well in advance of the election. Trump is expected to win once again.

The currency market tends to evolve according to technical and fundamental factors. Technical patterns, such as a double top, provide a clue as to where the market might be headed. But fundamentals give the "push" that prices need to really move.

Going forward, the path of least resistance is for the GBPUSD to follow the fundamentals associated with the U.S. and the U.K., and to oscillate according to which economy is most affected at that time.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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