GBPUSD Breaking Higher as Probability of UK Rate Increase Rises
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GBP price, news and analysis:
- GBPUSD has risen above the upper bound of a symmetrical triangle chart pattern as the probability rises of a UK interest rate increase next week.
- The pair is still benefiting from news that UK Prime Minister Theresa May is to take personal control of the Brexit negotiations.
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GBPUSD breaks higher
GBPUSD is well placed for further gains after a break to the upside from a symmetrical triangle pattern on the charts that has contained the price for the past 10 days. That suggests further gains ahead of next Thursday’s meeting of the Bank of England’s monetary policy committee, which is widely expected to increase the bellwether UK Bank Rate to 0.75% from 0.50%.
GBPUSD Price Chart, Hourly Timeframe (July 16-26, 2018)
In the overnight index swaps market, where rate move probabilities are assessed, the chances of a rate hike now stand above 80%, with GBP sentiment helped too by news earlier this week that UK Prime Minister Theresa May is to take personal control of the Brexit negotiations with the EU.
Chart by Thomson Reuters
UK/US trade deal doubts
One key question looking further ahead is whether a post-Brexit trade deal between the UK and the US has been helped or hindered by the improved prospects of a new trade deal between the EU and the US. However, a climb in GBPUSD to the highs of 1.3269 on July 17 and then 1.3293 on July 16 is looking increasingly possible.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.