Key Highlights
- The British Pound made a solid upside move recently and traded above 1.3750 against the US Dollar.
- A break above a major bearish trend line with resistance at 1.3550 on the 4-hours chart of GBP/USD initiated a crucial uptrend.
- The pair may correct a few pips during the coming sessions, but it remains supported above 1.3600.
- Today’s UK Consumer Price Index for Dec 2017 could trigger swing moves in the short term (forecast 3.2% versus previous 3.1%, YoY).
GBPUSD Technical Analysis
The British Pound rose sharply this week above 1.3600 against the US Dollar. The GBP/USD pair even broke the 1.3700 resistance to place itself in a major uptrend.
Looking at the 4-hours chart of GBP/USD, there was a break above a major bearish trend line with resistance at 1.3550. It opened the doors for more upsides and the pair broke the 1.3700 and 1.3750 resistance levels.
The upside move was strong and buyers were able to push the price above 1.3800. The recent high was 1.3819 from where a downside correction was initiated. An initial support on the downside is around the 23.6% Fib retracement level of the last wave from the 1.3457 low to 1.3819 high.
There are many supports on the downside such as 1.3680 and 1.3650. However, the most important is at 1.3600-1.3610. The stated 1.3600-1.3610 area is a significant pivot and it will most likely act as a strong buy zone if the pair corrects lower from the current levels.
On the upside, a daily close above 1.3800 could trigger a major upside reaction towards the next major barrier at 1.4000. The next move in GBP/USD may depend on today’s Consumer Price Index results in the UK.
The market is looking for an increase of 3.2% in Dec 2017 (YoY). If the actual is 3.2% or above 3.2%, GBP/USD could accelerate its gains. On the other hand, any disappointing reading would ignite a short-term correction towards 1.3680 or 1.3610.
Looking at the other major pairs – EUR/USD settled above the 1.2200 level and it recently traded as high as 1.2296. USD/JPY extended declines and it seems like it is heading towards the 110.00 level.
