Cable treads lightly ahead of inflation data; triangle pattern breakout still awaited
GBP/USD trading range continues to be defined by triangle pattern
At 0830 GMT, there will be the release of UK inflation data for March and though the data may have short-term repercussions for the pound, it isn't an imminent game changer as Brexit remains the major driver of the currency.
For the moment, the pound is trading carefully ahead of the data release with cable holding a tad higher as the dollar is slightly softer on the day.
However, the main focus for cable remains on the awaited breakout of the triangle pattern as pointed out in the chart above. Negative Brexit headlines helped to weigh on the pair, lending a helping hand to sellers to keep price within the the downwards trendline for now.
I reckon the inflation data later will offer little of anything new to traders as the ultimate driver for the pound will be reliant on how Brexit developments transpire. But with Brexit headlines few and far between this week, we could see intra-day moves trigger a ripple effect that leads to a larger technical play should it offer the opportunity for traders to do so.
That said, I'm not expecting much from the inflation report later and I would still expect cable to hold within the triangle thereafter. But with the range continuing to narrow, a breakout is certainly in the works and the trade will then to go with the break. If it comes as a result of Brexit headlines supporting the move, that would be even better for us traders.