GBP/USD Forex Signal 20/08: Double Top Pattern Forms (Chart)

(MENAFN- Daily Forex) Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.3350.
• Add a stop-loss at 1.3595.
• Timeline: 1-2 days.

Bullish view

• Buy the GBP/USD pair and set a take-profit at 1.3595.
• Add a stop-loss at 1.3350.

The GBP/USD exchange rate pulled back for two consecutive days as traders focused on the upcoming UK inflation and retail sales data, FOMC minutes, and Jerome Powell's statement at the Jackson Hole Symposium in Wyoming. It retreated below the support at 1.3500, down from this month's high of 3595 Inflation Data, FOMC Minutes, and Jackson Hole Meeting Ahead

The GBP/USD exchange rate retreated after the US published mixed housing starts and building permits data on Tuesday. The report showed that the country's housing starts rose by 5.2% in July after growing by 5.9% in the previous month.

Another report showed that the building permits slowed from 1.39 million to 1.32 million in July this year. These numbers meant that the housing sector is being affected by the sustained high interest rates in the United States.

The next important data to watch will be the mortgage rates and applications during the month. This report will be followed by the FOMC minutes of the last monetary policy meeting, which will provide more information about the deliberations that took place.

The bank decided to leave interest rates unchanged between 4.25% and 4.50%, where they have been since late last year. Officials have been concerned about the impact of Donald Trump's tariffs on inflation.

Their fears have been confirmed by the recent consumer inflation data. The report showed that the headline Consumer Price Index (CPI) remained unchanged at 2.7%, while the core inflation figure rose to 3.1%. Another report showed that the PPI inflation report rose to 3.6% in July.

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The other important GBP/USD news will come on Friday when Jerome Powell talks at the Jackson Hole Symposium. Historically, this speech has offered the central bank governor an opportunity to hint on what to expect in the next meeting.

The UK will publish the July inflation report on Wednesday, as market participants predict that the bank is done cutting rates this year as inflation has remained at uncomfortable levels this year.

EURUSD Chart by TradingViewGBP/USD Technical Analysis

The daily timeframe shows that the GBP/USD pair has moved downwards this week as traders wait for the upcoming events. It dropped from a high of 1.3595 on August 14 to the current 1.3485.

The pair has formed the highly bearish double-top chart pattern at 1.3596 and a neckline at 1.3145, its lowest level on August 1. A double-top pattern often leads to a strong bearish breakdown.

The Relative Strength Index (RSI) has pointed downwards and is about to cross the neutral point at 50. Therefore, the pair will likely continue falling as sellers target the next key support level at 1.3350. A move above the resistance at 1.3595 will invalidate the bearish outlook

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