GBP/USD Forecast: overbought conditions warrant some near-term consolidation
|The GBP/USD resumed with its prior appreciating move and tested the key 1.40 psychological mark, for the first time since the historic Brexit vote, during the Asian session on Tuesday. Optimism over a favourable divorce deal with the EU, following encouraging comments from the French President Emmanuel Macron, was seen as one of the key factors underpinning the British Pound on Monday.
Meanwhile, the market had a rather muted reaction to the US Senate’s vote to end a three-day government shutdown, with bulls now looking to take some breather ahead of this week's important macro releases from the UK and the US. Today's UK economic docket, featuring the release of Public Sector Net Borrowing, is unlikely to provide any meaningful impetus and the pair seems more likely to enter a bullish consolidation phase.
Even from a technical perspective, the near-term overstretched conditions warrant some consolidation before an extension of the near-term strong bullish trajectory. Hence, any subsequent up-move beyond the 1.40 handle might now confront some fresh supply near the 1.4030 region. A clear break through the mentioned barrier could pave the way for a test of 1.41 round figure mark, which could now act as a near-term ceiling.
On the flip side, any meaningful retracement is likely to find immediate support near the 1.3940-35 region, below which the pair could correct back below the 1.3900 handle and head back towards testing 1.3855-50 support area, marked by 61.8% Fibonacci retracement level of the pair's post-Brexit slump.
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