GBP/USD Analysis: Wedge Breakout Attempt Ahead of Fed and BoE Decisions

[FXOpen]

The foreign exchange market is heading into a busy week, with the Federal Reserve meeting on 15–16 September, followed by the Bank of England’s rate decision on 17 September. This sequence of central bank meetings, rather than individual macroeconomic releases, is shaping the current fundamental backdrop for the pound. Ahead of the decisions from the two major central banks, market participants are likely to remain cautious as they assess the future direction of monetary policy in the US and UK.

GBP/USD Technical Analysis​

On the GBP/USD four-hour chart, a pronounced short-term downtrend developed between 21 August and 2 September, pushing the pair towards the green support level at 1.3475. From this low, the price began to recover, forming a rising wedge in which both boundaries slope upwards, although the lower boundary is rising at a faster pace. On 10 September, the price attempted to break below the wedge’s lower boundary, but the move has so far remained within the current market profile, with the price holding between its upper boundary at 1.3545 and the Point of Control (POC) at 1.3515.

If the breakout proves false and the price moves through the profile’s upper boundary, the red resistance level around 1.3570 could halt the advance. If the price does continue lower and breaks through both the POC and the profile’s lower boundary at 1.3500, market participants could turn their attention to the green support level at 1.3475. The RSI + MAs indicator shows readings of 48, 46 and 47, with all three measures sitting in the middle of the neutral zone, making it too early to confirm the breakout.

Key Takeaways​

The attempted wedge breakout has yet to develop beyond the profile, while neutral RSI + MAs readings provide no clear indication of the next direction. More pronounced price action in the pair is likely to emerge as the Bank of England’s rate decision approaches.

 

[EthanCole]

Honestly, trying to trade a wedge right before a Fed and BoE double-whammy next week is just asking to get chopped up. I'm sitting on my hands until the dust settles on those rate decisions.

 

[JulianCraft]

Spot on. Sitting on your hands is the only sane play here. With inflation still sticky and the Fed painted into a corner, I wouldn't touch cable with a ten-foot pole right now. One hot CPI print and Powell is going to have to sound way more hawkish than this market is pricing in.

 

[LucasBennet]

Man, you guys are brave even looking at the charts right now. I took one look at that wedge and just closed my terminal. There is zero chance I'm holding a Cable position through both the Fed and the BoE. It’s a total coin flip at this point and the liquidity will probably be a nightmare. I’m just staying flat until at least Thursday afternoon.

 

[Zakami Ng]

Lol true, holding through both of those is basically a casino. My MACD is looking completely flat on the 4H anyway, so I'm with you guys—just gonna watch from the sidelines.

 

[LeoSterling]

Imagine closing your terminal for this lmao. This volatility is exactly why we play the game. I'm already 100x leveraged, either my sl gets hit in 5 seconds or we absolute send it. No risk no fun.

 

[Liam Walker]

Whenever this whole board agrees that a week is a "coin flip" and everyone sits on their hands, it usually ends up being the cleanest trend of the month. I'm taking the wedge breakout long right here. Fading the fear, enjoy watching from the sidelines.