Downward Trend Still Strong For GBP/USD

The British pound is finding some strength against the dollar on Thursday, after falling to a 21/2 year low. However, concerns still remain amongst investors whether this strength has any reality, given that the country is on the verge of a third recession. There is no shortness in a string of sluggish outlook for Great Britain as its credit rating was downgraded last month. Economic manufacturing data released on Tuesday showed further weakness for the British economy.
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Most analysts believe that traders could be building large positions before Finance Minister George Osborne presents his budget on March 20. It is also widely expected that the BOE could soon unravel another round of quantitative easing program.

Technical Analysis
Since the GBP/USD pair has broken out of its ascending triangle, it is unable to break above the lower line of this triangle hown with the dotted yellow line. This means still a lot of weakness for the GBP/USD. Moreover, the price action was also able to break its support level of 1.4934-1.4870, which further strengthens this argument.

However, it is also important to state that we are forming a reverse complex Head & Shoulder pattern at the moment, and if it does play out, it could push the price action towards the minor resistance level of 1.5077 before it continues its downward trend any further.

The RSI is showing a clear sign of deflection, which means bias could be towards the downward.

Important Zones

Support Zones

1.4695-1.4635 (Major)
1.4934-1.4870 (Minor)

Resistance Zone

1.5323-1.5268 (Minor)
1.5558-1.5514 (Major)

DISCLOSURE & DISCLAIMER: The Above Is For Informational Purposes Only, And Not To Be Construed As Specific Trading Advice. Responsibility For Trade Decisions Is Solely With The Reader.

by Naeem Aslam