The GBPUSD currency pair has suffered considerable volatility of late, reversing sharply to the downside at the end of last week. Traders are skeptical as the market tests vital channel support. They’re looking ahead to big economic figures from the UK too, with the Consumer Price Index (CPI) and the BoE rate decision due on Thursday. The movements of the currency may be greatly influenced by the impending announcements.
The complete reversal of the current uptrend for GBPUSD is still at 1.3215. Analysts indicate that as long as the pair holds above this level, any weakness can be interpreted as part of an ongoing wave four correction. Market participants expect that once this correction concludes, a wave five rally will ensue, propelling GBPUSD higher in the days ahead.
At the moment, GBPUSD is testing key support levels. If we regard the latest drop as a wave B rally, we could risk seeing the channel support broken. Together, these trends create significant new opportunities for the market. A situation like that would be even worse for GBPUSD’s outlook and its chances of holding onto any higher turf.
Speculators expect a retest of the 1.3300 region for GBPUSD, which marks the bottom of the previous wave four. This area has the potential to be an important buffer area for a possible recovery down the road. This higher-degree wave four correction for GBPUSD is still playing out. This indicates the market is still deep in the correction part of its cycle.
Considering the turbulent economic landscape in the UK, that has only reflected the added complexities to GBPUSD’s trajectory. The publication of critical data this week would be enough to give legislators the push they need to get things moving one way or the other. If the data comes in positive, that would be a net positive for bullish sentiment. Such momentum could push the market to and through the psychologically important 1.3300 level. On the flip side, negative data would likely increase bearish pressure on the pair.