GBPUSD Charts Large Topping Pattern

Cable has charted a big double top pattern (green ellipses). These patterns are usually of the reversal variety.  It is notable that the 5-day green EMA is below the orange 13-day EMA, and the orange 13-day EMA is below the black 34-day EMA. This is a bearish EMA formation. Price has broken below the patterns “neckline” at 1.3116 and has now approached its red 200-day SMA.  It is expected that cable will find support at this SMA but a break below is likely to signify further weakness.

Cable has taken a knock from a more dovish tone from BoE Governor Mark Carney, lower UK GDP and Brexit concerns. The GDP growth contraction for the 3-months to March was the weakest growth rate since a 0.1% print recorded in Q4 2012. With regards to Brexit, there is a major row brewing within Theresa May’s ruling party between the so-called “Brexiteers” and “Remainers” over whether the UK should leave Europe’s customs union or enter a “customs partnership.”

The PM has repeatedly said that there will be no customs union after Brexit. To confound this the Brexiteers have delivered an ultimatum to vote against her EU deal if she tries to force through a customs partnership.