GBP/USD Daily Forecast – Sterling Strengthens But Nears Important Resistance

Broader Range Continues for GBP/USD

The pound to dollar exchange rate has alternated between weekly gains and losses for six consecutive weeks and the pair largely remains range bound.

Last week, an early week attempt at the 1.3000 brought hope among bulls for a range break. However, the pair failed to follow through and pushed lower for a small weekly loss.

A catalyst will likely be required for a range break and it doesn’t seem like one will be presented this week. For one, the economic calendar is quite light. But more importantly, with Thanksgiving on Thursday, it is likely that volatility will slow, especially in the second half of the week.

It is still possible that the pair sees a bit of volatility on political developments in the UK. Or a further development in the US-China trade war. But unless there is news on either front, I suspect GBP/USD will be contained within a tight range in the week ahead.

Technical Analysis

GBP/USD is showing some upward momentum in the early day after a small gap up at the weekly open. But some important resistance has come into play.

On a 4-hour chart, the 100 moving average has come into play and seems to be causing a bit of a pause in the rally thus far. Just above it, the 20 moving average comes is found. This moving average carries confluence with a horizontal level at 1.2897.

Further, the 20-day moving average is also found at 1.2879 to create even more resistance. For that reason, I think the upside might be limited at this stage.

The daily close should be important. If the pair holds below its 20-day moving average, I suspect there could be some further weakness on Tuesday.

But from a broader picture, the pair continues to trade in a range. This environment is beneficial for short-term traders but there does not seem to be a clear signal for traders that are targeting a more meaningful move.

Bottom Line

• GBP/USD has rallied into a notable resistance confluence found near 1.2880.
• From a broader perspective, the pair is range bound. With the Thanksgiving holiday later in the week, this range is likely to hold for the week ahead.