Traders have once again received positive encouragement that the 1.51 level for the GBPUSD is a probable “bottom” this week after the pair managed to strongly rally away from this level, and towards a two-week high at 1.5320. The GBPUSD is continuing to trade with high volatility, but the technical traders are probably enjoying some of the present opportunities available in the pair. Not only is 1.51 looking like very stubborn support, but the daily timeframe points out that the GBPUSD is also strictly abiding to its Simple Moving Averages (SMA).
Despite the significant 200 pip rally over the previous two trading days, the daily timeframe shows that the pair is now facing heavy resistance at 1.5328 with this not only being yesterday’s high, but also the 200 SMA. If the GBPUSD is not able to surpass this resistance, there is actually a technical threat of another sharp pullback towards the 1.51 support. There is a risk for another sudden shift of momentum in the GBPUSD if Thursday’s Bank of England (BoE) interest rate decision suggests that the central bank are going to delay raising UK interest rates until far into the second half of 2016.
What happens if the GBPUSD continues to rally? There will be some anticipation over whether the pair can make its way towards 1.55 but this could be blocked by the 50 and 100 SMA’s, which are between the respective 1.5436 and 1.5488 levels on the Daily timeframe. At the end of the day and if you are a long-term investor of the GBPUSD, you are likely going to want to wait until the pair surpasses its moving averages before gaining confidence that there is further potential for the GBPUSD to enter a stronger rally as we continue into the final quarter of the year.
Further USD weakness would help the chances of this, although we have noticed very recently that any risk-off attitude from investors can strongly damage investor attraction for the GBPUSD.
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