British pound traders have been very busy lately as rumors hinted at a possible agreement between the EU and the UK on the Windsor Framework for the Protocol on Ireland/Northern Ireland. Yesterday, those rumors were confirmed, as the President of the European Commission, Ursula von der Leyen, was in the UK sealing the agreement.
The deal marks an end to Brexit discussions. It also marks a new beginning in the relationships between the EU and the UK to find solutions that will work for everyone in Northern Ireland and, at the same time, will protect the EU’s Single Market.
As expected, the pound bounced from its recent lows. Not only the GBP/USD exchange rate, but also the GBP/CHF and other pairs rallied. Considering that today is the last trading day of the month, the rally may extend into March. In particular, GBP/USD looks bullish also from a technical perspective.
GBP/USD ascending triangle suggests more upside
The rally from last year’s lows is nothing short of impressive. 1.24 capped it so far, but an ascending triangle pattern is visible.
Ascending triangles are bullish patterns. The market stops and consolidates for a while before making a new high.
Moreover, the measured move equals the longest segment of the triangle, projected to the upside from the horizontal resistance. In this case, it is about five-hundred pips, giving a target of 1.29 for the GBP/USD exchange rate.
The British pound rallied against the US dollar as the dollar topped in October last year. Since then, the GBP/USD formed a series of higher highs and higher lows, which still holds today.
If we add the possible ascending triangle to it, then the price action in March should support the pound. Conversely, a drop below 1.18 would invalidate the ascending triangle.
Source: https://invezz.com/news/2023/02/28/is-it-safe-to-buy-the-british-pound-amid-the-windsor-framework-agreement/