GBP/USD has shown momentum in crrying on with its ongoing uptrend, as it bounced off support on the rising trend line connecting the lows on the 4-hour time frame. This suggests that bulls are back in action and are ready to push the pair back to its recent highs.
A continued rally could take GBP/USD up to the 1.6800 major psychological resistance. However, stochastic is already in the overbought zone, which means that pound bears are ready to push the pair lower. Another retest of the trend line might take place before the pair resumes the climb. Of course a downside break is also possible if today’s UK data comes in weak.
Going long at market if the retail sales report comes in strong could yield a good return on risk with a stop below the trend line or the 1.6400 handle and a target of 1.6800.
By Kate Curtis from Trader’s Way