GBP/USD consolidates declines within continuing bearish trend

<p>GBP/USD (daily chart shown below) has consolidated its recent declines in the form of a bearish flag pattern. This consolidation has formed within a strong […]</p>

GBP/USD (daily chart shown below) has consolidated its recent declines in the form of a bearish flag pattern. This consolidation has formed within a strong and continuing bearish trend that has been in place for more than four months since the 1.7190 multi-year high in mid-July.

The sharp drop since July, which represents more than a 9% decline down to last week’s 1.5588 one-year low, has consistently traded underneath a well-defined downtrend resistance line as well the 50-day moving average.

During the course of this downtrend, GBP/USD has been trading under strong and continuous pressure in line with substantial US dollar strength within the past several months. Occasional pullback rallies have failed thus far in providing any significant respite or recovery for the embattled currency pair.

2014-11-24-GBPUSD

The current consolidation appears to be poised for further downside pressure to conform with the prevailing bearish trend. The noted bear flag pattern could provide an impetus for a continuation of the downtrend towards further lows.

With near-term upside resistance around the 1.5750 level, any breakdown below the bear flag pattern and the noted 1.5588 low would confirm a continuation of the entrenched downtrend, with further downside targets residing around 1.5400 and then 1.5250.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.