GBPUSD has been trending higher on its 1-hour chart, moving inside an ascending channel and testing the resistance. If the ceiling holds for now, price could pull back to the channel support before resuming its climb.
Applying the Fib tool on the latest swing low and high shows that the 50% to 61.8% levels are in line with the channel support around 1.3200-1.3250. The 100 SMA just crossed above the 200 SMA to confirm that the uptrend is likely to carry on. Also, these moving averages are edging close to the channel support, possibly adding to its strength as a floor later on.
Stochastic is indicating overbought conditions for now, which suggests that buyers are exhausted from the climb. This could allow profit-taking to happen and a quick correction to take place. However, a break below the channel support could be a signal that the uptrend is over.
Earlier this week, the UK printed a stronger than expected services PMI, rounding up the upbeat industry PMIs from the previous week. These confirm that the UK economy is holding up well even with looming uncertainties from the Brexit.
On the other hand, data from the US economy has been far from impressive, as the ISM non-manufacturing PMI saw a sharper than expected drop from 55.5 to 51.4 versus the estimated dip to 55.4. Apart from that, the Fed’s labor market conditions index saw a -0.7 reading compared to the earlier 1.3 figure.
UK manufacturing production numbers are lined up for today and another batch of upbeat results could keep the pound afloat. Also lined up today is the BOE Inflation Report hearings, which might contain some reassuring remarks from policymakers. As for the US, FOMC member George is set to give a testimony and the JOLTS job openings report is up for release.
By Kate Curtis from Trader’s Way