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A formation of the rectangle pattern on a 4H chart by the cable is a clear indication of the sideways movement. This type of patterns is usually formed as a trading range make a pause in the trend. At the moment of writing the pair was changing hands at 1.6612, just several pips above the 200-period SMA and pattern's support. Keeping in mind the pair's latest performance, the downside breakout is unlikely to happen, while the fact a symmetrical triangle on the 4H chart is moving to its apex, is bolstering the case the pair can be highly volatile this week. Moreover, trading volume is decreasing and a spike in volume will be considered as a confirmation for the breakout.
Traders believe the pair will continue moving sideways this week, as consensus forecast stands for 1.6634, just 3 pips below the daily pivot. Additionally, almost equal number of participants is having a bullish and bearish outlook on the pair. Market sentiment is slightly bearish, while technical indicators on a 4H chart are neutral.
Some of the traders consider the pair as an overbought already, seeing a period of a downside correction. "After a period of strong buying, the Pound passes for a moment of remediation that should boost the search for support and retractions near the price of 1.64," said trader BoonerFx. According to Dardar, even despite economic strengthening in the U.K., the pair will be fluctuating between 1.66 and 1.67 as a period of consolidation is needed.
An abundance of fundamental data both from the U.K. and the world's largest economy can add more liquidity into markets. Traders believe, statistics from both countries will push their domestic currencies higher, however, it will be interesting whether FOMC meeting will be able to outweigh British unemployment data.
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