GBP/USD: Head and Shoulders pattern points towards potential downside – SocGen

Economists at Société Générale analyze GBP/USD technical outlook.

Support 1.2590, resistance 1.2820

GBP/USD has pulled back towards the trend line drawn since last November and is near intermittent support of 1.2590 representing the low of June. Interestingly, it has formed a Head and Shoulders pattern which generally points towards potential downside. 

If the pair fails to defend the neckline at 1.2590, there could be risk of a deeper down move towards 1.2480, the 23.6% retracement from last year and 1.2300. 

Left shoulder at 1.2820/1.2870 must be overcome for negating the pattern.