GBP/USD Daily Forecast – Sterling Regains Upside Momentum

Sterling Leads the Majors in Early Day Trading

The British pound was firmly bid at the European open today and is seen advancing against all of its major counterparts in the early day. The pair is nearing resistance that held it lower late last week. This overhead hurdle takes the form of a 200-period moving average found on a 4-hour chart.

The currency pair turned decisively higher around the middle of the month as traders started to pare back bets on a no-deal Brexit. The recovery has taken GBP/USD back into positive territory for August, and as long as it holds above 1.2154 over the next few days, a green candle will print on a monthly chart.

Next week, we may see more volatile swings in the Sterling pairs as the British Parliament returns from its summer recess. Until then, Sterling looks poised to continue the recovery.

Later in the session today, BoE member Silvana Tenreyro is scheduled to speak in a panel discussion and it is likely that monetary policy will be discussed. Consumer confidence figures out of the US will be released shortly after her speech.

Technical Analysis

GBP/USD appears to be contained within a rising trend channel Since Thursday. The pair caught a bid from the lower bound of the channel earlier today and has erased just over half of the decline from last week’s high.

The hurdle last week and early this week was the 200 MA on a 4-hour chart. This remains in play and the pair was last seen a few pips away from it. If we see a break above it, the next area of resistance is found at the 1.2300 handle. This level confluences with the upper bound of the rising trend channel mentioned. I expect this to be strong resistance if the pair continues to rally in the session ahead.

It would take a sustained break below the channel bottom, currently around 1.2210, to shift the directional bias to bearish.

Bottom Line

• GBP/USD appears to be continuing higher within its recovery.
• The next area of upside interest is the 200MA on a 4-hour chart. Currently around 1.2265, followed by 1.2300.