Bottom line: GBPUSD long term structure remains bullish against 1.1414 lows. Bulls have managed to print yet another high around 1.3369 levels today before pulling back. Only a break below 1.3059 would confirm a major top is in place.
Fundamental Outlook:
EURUSD had rallied back on Friday, to close above 1.1900 mark after a volatile trading session the day before. The FOMC might continue its dovish stance and more accommodative monetary policy going forward. The above announcement might have led to the US Dollar slide over the last week.
GBPUSD has managed to print 1.3369 high today, as the safe haven US Dollar continued to slide during the Asia-Pacific session. It would be interesting to see if the exchange rate pushes further towards 1.3400/1.3500 psychological mark.
COVID-19 infections continue to rise in several European countries, increasing the risk of a second wave. The worst affected nations Italy, Spain and France might be facing more restrictions and lock downs if infection rate increases further.
Technical Analysis:
GBPUSD managed to continue its recent rally and print 1.3369 highs today. The currency is trading close to 1.3300/10 handle as we prepare to publish and might be vulnerable for at least a corrective drop towards 1.2150 levels, going forward. A break below 1.3054 would confirm.
GBPUSD bulls have remained in control since 1.1414 lows in March this year. They have carved a series of higher lows and higher highs through 1.3369 mark. If they are successful in pushing through 1.3500 levels, it would confirm a long term trend reversal ahead.
Immediate support is seen towards 1.3054 levels, while major resistance is seen through 1.3500. A break below 1.3054 would confirm that GBPUSD is setting up for a corrective drop towards 1.2150 in the next few weeks. Alternately, break above 1.3500 encourages bulls going forward.
Most traders might remain flat for now and allow price action to break below 1.3054 support. They might prepare to initiate fresh short positions on rallies thereafter. Potential downside targets remain towards 1.2600 and 1.2150 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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