GBP/USD: Breakout remains elusive even as UK heads for December election
- GBP/USD remains stuck at key resistance despite the UK parliament approving the December election.
- A flag breakout on the 4-hour chart would revive the bullish view.
- The bull flag will likely fail if the Federal Reserve delivers a hawkish rate hike.
GBP/USD's struggle for a flag breakout continues even though the UK parliament on Tuesday backed a general election on December 12.
The House of Commons on Tuesday approved legislation paving the way for the first December election since 1923, according to the BBC. The bill is expected to become a law by the end of the week.
Even so, the British Pound is struggling to draw bids. The currency pair is currently trading at 1.2863 and has spent a better part of the last 12 hours chipping away at the resistance of the bull flag on the 4-hour chart.
A flag breakout, if confirmed, would imply a continuation of the rally from recent lows near 1.22 and could pave the way for a re-test of the Oct. 21 high of 1.3012.
The breakout, however, may remain elusive or fail if the Federal Reserve cuts rates by 25 basis points and signal a rate cut pause, sending Treasury yields and the US Dollar higher across the board. It is worth noting that the market has already priced in a 25 basis point rate cut.
Ahead of the Fed rate decision, the pair may also take cues from the US Q3 preliminary GDP and the monthly ADP jobs data.
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Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
