GBPUSD recently broke past the resistance of a long-term ascending channel, indicating that a steeper climb may be underway. Price has since pulled back to the broken resistance, which is now holding as support and seeing a spinning top reversal candle.
This area of interest lines up with the 38.2% Fibonacci retracement level, adding to its strength as potential support. The 100 SMA is above the longer-term 200 SMA as well, confirming that the path of least resistance is to the upside.
Stochastic is turning lower still, though, which means that there’s plenty of selling pressure left. A larger correction could take GBPUSD to the lower Fib levels or back to the channel support at 1.3600 near the 100 SMA dynamic inflection point.
There were no major reports out of the UK recently but it’s worth noting that the latest set of PMI readings across all sectors have been weaker than expected and showed a slower pace of expansion. Meanwhile, the US has seen stronger than expected NFP and ISM PMI readings, with leading indicators suggesting more gains.
There are no major releases from both the US and UK today. A couple of FOMC members, namely Williams and Dudley, are scheduled to give testimonies so their remarks could shape Fed tightening expectations.
Pound traders, meanwhile, could start pricing in expectations for the BOE Super Thursday. The central bank will make its policy announcement, release the minutes of their meeting, and also print their updated economic forecasts in the quarterly Inflation Report.
By Kate Curtis from Trader’s Way