GBPUSD Technical Analysis – Reversal patterns working

The British pound currency has continued to rally against the US dollar as the greenback falls broadly on the currency market due to hopes that inflation has peaked.

On Friday, as sterling tackled the 1.2400 level the up move appeared to be driven by strong gains in US equity markets, and especially technology stocks.

Basically, tocks started to rally after Fed voting member Waller said “If markets are right and inflation is coming down, that’s great news. Would have no problem changing policy.”

As you can see, the main driver for sterling strength appears to be from expectation that the Fed will reduce rate hikes and other central banks will be more aggressive.

Much evidence on the charts suggests that the GBPUSD pair will continue to go higher according to the existence of many bullish reversal price patterns.

Looking at sentiment data and how traders feel about sterling, the ActivTrader Market Sentiment tool shows that traders are growing more bearish despite the recent sharp price ramp.

With 59% of traders currently bearish, so it should be noted that this current sentiment reading is highlighting that sterling still has much scope to trade higher.