GBP/USD analysis: easing from highs, still bullish

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3136

UK inflation data to be out this Wednesday would set the tone for GBP.
USD gains always limited against Pound when this last is supported by Brexit hopes and data.

The GBP/USD pair retreated twice from the 1.3170 long-term resistance, to end up losing some ground late US session. Risk appetite played against the greenback during the first half of the day, as the latest round of tariffs applied to China were of 10%, below the worst-case scenario anticipated by market players. Furthermore, China's retaliatory measure seems not relevant, further boosting gains in equities ahead of the close. There were no new developments on Brexit, and the UK calendar didn't offer anything of relevance, but Wednesday will be a busy day for GBP traders, as the kingdom will release multiple August inflation figures, including CPI, PPI, and the Retail Price index.

The pair trades near a daily low of 1.3118 but retains its bullish short-term stance according to technical readings in the 4 hours chart, as it continues developing above a firmly bullish 20 SMA. In the mentioned chart, the Momentum maintains its bullish slope above its 100 level, while the RSI is pulling back from overbought levels, not enough to suggest the current decline is poised to continue. The high of the day is critical, as the pair has there the 50% retracement of the 2016/18 rally, and a break above it should result in a steeper advance, particularly if supported by UK inflation data. Below 1.3120, on the other hand, the pair could correct lower, but bears won't take over unless 1.3045 gives up.

Support levels: 1.3120 1.3090 1.3045

Resistance levels: 1.3170 1.3210 1.3240

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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