GBP/USD Update – The Pair Is Set to Range

GBPUSD continues to range and consolidate over the last couple of days as the market corrects some of the dollar weakness that we had seen across the board on the previous day.  This helped push the GBPUSD towards 1.26 on the previous day but since then, we have been seeing the pair correct itself and it trades just above 1.25 as of this writing. We have been mentioning that there will be a lot of support in the resistance turned support at 1.25 and we are also likely to see a lot of selling in the 1.26 region and with this in mind, it looks as though the pair is likely to consolidate and range within a tight range in the short term.

GBPUSD Set to Consolidate

Though there has been a respite to global risks over the last 24 hours, the US under Trump seems to be taking a new approach towards their foreign policy and this is likely to affect the balance that we have been seeing in the world over the last few years. After the missile attack in Syria and the open threat to North Korea, yesterday we saw the US drop a huge bomb in the Afghan border and in the process, raised tension in that region as well.

This could be a form of strength that Trump is trying to show after his repeated failures in fulfilling several of his campaign promises over the last few weeks. His failures in the domestic front had placed doubts on his capability to fulfill his other promises that he had made during his campaign and this bombing and threats to other countries might be viewed as a way of showing his strength. This has placed the dollar on the backfoot and this was the reason for the GBPUSD pair to move up. But the risks have waned over the last 24 hours and that is the reason why we are seeing a correction back to 1.25.

Looking ahead to the day, we do not expect much volatility or liquidity in the pair for today, on account of the holiday and we can safely expect some consolidation today. Technically, the support at 1.25 and the resistance at 1.26 should be key and a break of 1.25 could open up 1.24 while we do not expect a break of 1.26 in the short term.