GBP/USD showing signs of strength

NEW YORK (Forex News Now) – The British Pound / U.S. Dollar pair will be of particular interest to FX traders in the short term, as it is showing signs of strength, and a obvious technical pattern, an ascending triangle.

Recent attempts at the 1.60 level in cable have all been turned away, but it should be noted that the recent lows are getting higher. This shows an upward bias and that there is mounting pressure to the buy side in the pair recently.

If the 1.60 area does give way, the next major area to pay attention to will be the 1.68 – 1.70 region, as it has been significant support and resistance in the past. The catalyst for this pair could be during next week, when the Federal Reserve statement comes out.

Traders will without a doubt look for any clues as to what the Fed might do about “quantitative easing part 2”. The entire world is waiting on that particular announcement, and as such, FX traders are essentially looking for a sign as to what to do about the U.S. Dollar.

The British Pound might be rewarded by FX traders because of the austerity measures that are taking place in the U.K. The government is currently in the process of cutting deep into spending, while the Americans are still spending like drunken sailors. Of interest on the charts is yesterday’s extremely bullish bar, and today’s hammer that is forming towards the top of the previous bar.

If traders can get the pair to stay above 1.60, this will serve as a strong base for the pair, and should be very supportive. On the other side of the trade, if this triangle doesn’t break soon, it will be negated, and as such, today’s bar could be proven to be a “hanging man”, a very bearish sign indeed.