GBP/USD Daily Forecast – Sterling Rises and Holds Above Critical Trendline

After trading a bit heavy in the early week, GBP/USD is starting to show upward momentum. More importantly, it has held above a previously broken trendline which signals more upside.
Jignesh Davda
GBP/USD

Technical Break Points to More Upside for GBP/USD

GBP/USD made a bullish break in the early week above a trendline that originates from a high printed in October. However, the pair proceeded lower in a two-day decline, threatening to break back below the trendline to invalidate the breakout.

But some late-day buying yesterday saved the pair from doing so. With some follow up today, it certainly appears like the pair is ready to resume high.

The pound to dollar exchange rate is benefiting from a weaker dollar as the greenback is seen declining against all of its major counterparts in early day trading.

The US Dollar index (DXY), in a similar fashion, reversed lower yesterday to give back a bulk of its daily gain. This has led to a reversal candlestick pattern on a daily chart to signal more downside for the dollar.

The Fed meeting minutes triggered some price swings in the dollar pairs yesterday but on net did not cause a sustained move. Policymakers signaled that they intend to stay put after cutting rates three times earlier in the year. The rhetoric of the minutes did not differ much from what was said in the press conference following the meeting.

Technical Analysis

GBPUSD Daily Chart

While it was a bit surprising that buyers didn’t jump in promptly to defend the broken trendline in GBP/USD, the end result is that they did. The candle print on a daily chart in relation to the trendline offers a bullish signal and I expect the pair will make its way once again to the psychological 1.3000 level.

GBPUSD 4-Hour Chart

On a 4-hour chart, the lower bound of a rising trend channel contained price action on yesterday’s dip. While the exchange rate remains above it, I expect it will continue to rise, in line with the broader pattern. A break below 1.2910, however, would turn the rising trend channel into a bear flag which would tend to signal more downside.

Bottom Line

  • GBP/USD has shown strength over the last 24 hours or so which leads me to believe it has resumed within the broader uptrend.
  • The next near-term target falls at 1.3000.
  • A break below 1.2910 invalidates the bullish near-term outlook.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US