GBP/USD foreign exchange signal: double top pattern indicates further downside

Sterling retreated to its lowest level in months after forming a double top on the back of the dollar's continued strengthening momentum, falling to a low of 1.3100, well below its September high.

The core reason for the decline in the GBP/USD pair was the continued strength of the US dollar, which started its rally after bottoming out in September and continued after the Federal Reserve announced a rate cut for the second consecutive meeting.

Some Federal Reserve officials have signalled that they remain concerned about US inflation. In a statement on Monday, Austan Goolsbee warned that inflation had been running above the Fed's 2.0 per cent target for too long and suggested he would not support another rate cut in December.

In the coming days, the GBP/USD currency pair will face a number of key factors. The most noteworthy of these is the upcoming US ADP private non-farm payrolls data, which will provide a reference for the Federal Reserve's interest rate decision in December.

In addition, the UK Supreme Court case related to Trump's tariff policy will also have an impact on the trend of the currency pair. The Supreme Court will hold its first oral argument in the case on Wednesday (November 5). Although the final judgment will not be announced for several months, the judge's questions during the debate will provide clues to the final direction of the judgment.

Another important piece of news affecting the trend of the pound/dollar is the interest rate decision to be announced by the Bank of England (BoE) on Thursday (November 6).

The GBP/USD double top pattern points to further downside

(GBP/USD daily chart, source: Internet)

The daily chart shows that the GBP/USD pair is in a strong downward trend over the past few months. The pair has fallen from a high of 1.3725 in September to the current level of 1.3140.

GBP/USD has formed a double top at 1.3725, and the exchange rate is currently at the neckline of this pattern - which is also the lowest point in August this year and coincides with the 38.2% Fibonacci retracement.

The target price of the double-top pattern is calculated as follows: first measure the distance from the top of the pattern (1.3725) to the neckline, which in this case is 4.23%; then extend the same amplitude downward from the neckline, and the target price is 1.2580.

In addition, the GBP/USD exchange rate has fallen below the 50-day and 200-day moving averages, and is also below the IchimokuCloud indicator, further supporting these signalsbearish view。

bearish view

Sell the GBP/USD pair and set the take profit level at 1.300. Set the stop loss level at 1.3250. Time period: 1-2 days.

watch multiple views

Buy the GBP/USD pair and set the Take Profit level at 1.3250. Set the Stop Loss level at 1.300.