GBP/USD Forecast: scope for further gains

The Sterling advanced against the greenback up to 1.4193 on Thursday, having shed some 50 pips in quiet Asian trading. The GBP/USD pair has been recovering ground in spite of poor UK data, as the downward rally fueled by fears of a Brexit, was largely overdone. But with no signs of recovering growth in the UK, the upside is still seen limited in the long term.

Shorter term, however, the latest decline seems barely corrective, as the positive tone prevails in the 4 hours chart, with room for further gains, particularly on a disappointing US employment report. In the mentioned chart, the technical indicators have retreated some from overbought levels, but remain far above their mid-lines, while the 20 SMA heads strongly higher, providing a strong dynamic support around 1.4050.

If the US report beats expectations, the pair may break below 1.4100 and extend down to the mentioned level, but it will take further declines below the 1.4000 region to confirm a downward continuation for next week. Above 1.4200 on the other hand, the pair can rally up to 1.4250/70, where strong selling interest around the long term static resistance is expected to contain the pair, at least today.

View the live chart of the GBP/USD

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