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GBP/USD Ascending Triangle Pattern - Eyes on 1.3185 Breakout!

EagleFX

The GBP/USD pair was closed at 1.31042 after placing a high of 1.31215 and a low of 1.30738. Overall the movement of GBP/USD pair remained bullish throughout the day. The GBP/USD pair posted gains for the3rd consecutive day on Monday as the risk appetite improved. The US dollar has been dominating the move of GBP/USD pair recently as GBP/USD pair was even able to rise after the news last week that the UK economy was officially in recession for the first time in 11 years.

The UK economy's Gross Domestic Product in the second quarter dropped by more than 20% and left the UK four times further into the red than its weakest point during the global financial crisis in 2008. On the other hand, investors were more optimistic about the economic recovery prospects as June 8.7% economic recovery was seen on a month to month basis.

Furthermore, the investors were also optimistic because of the hopes of a vaccine for the highly contagious COVID-19 and kept the risk sentiment alive and GBP/USD pair on the positive side. In addition, the delay in the review of the US-China trade deal also provided an additional boost to investor's confidence.

On Brexit front, the Brexit-talks will resume on Tuesday and discuss whether the financial sector of London will be able to access the European Union's market. According to Financial Times, the EU's financial services chief said that the City of London might not find out if it will have access to the whole of the EU's market until after the end of the year.
The mixed or disappointing signals from Brexit front has positioned the currency pair GBP/USD into the neutral territory for the first time since April. This is somewhat behind the Pound's spot strongest performance in mid-July.

While on the US front, the US stimulus package has not been agreed upon by Republicans & Democrats. Democrats have said to compromise $1 trillion from their $3 trillion packages only if Republicans would add $1 trillion in their package proposal. It has caused a delay to the next stimulus, and hopes regarding this are getting weak day by day.
This has weighed on the US dollar, and the weak US dollar has supported the upward trend of GBP/USD pair on Monday.

Meanwhile, the US's data about the Empire State Manufacturing Index dropped to 3.7 from the projected 14.6 and weighed heavily on the US dollar, which ultimately added strength to the currency pair.

Whereas, the analysts at Citi Bank has said that strong fiscal stimulus support from the UK government and the Bank England would need later this year. It also projected that a movement towards the Brexit deal should all be further supportive of the Pound over the medium term. Citi Bank sees the GBP/USD trading at 1.30 on a 0-3 month horizon and 1.33 on a 6-12 month forecast. On Wednesday, the minutes of the Federal Open Market Committee will be released and will remain under close watch by investors.

Daily Technical Levels
Support Resistance
1.3075 1.3124
1.3050 1.3148
1.3027 1.3173
Pivot point: 1.3099

The GBP/USD is trading with a bullish bias at 1.3162 level, holding right below a double top resistance level of 1.3183 level. On the 4 hour timeframe, the GBP/USD pair has formed an ascending triangle pattern that is likely to extend support at 1.3080 and suggests the odds of bullish bias in the pair. Typically, the ascending triangle patterns violate on the higher side; therefore, we should wait for 1.3180 breakouts before taking a buy trade. Elsewhere, closing below 1.3183 level can trigger selling until 1.3120. Good luck!

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