GBP/USD Analysis: In limbo ahead of Trump’s inauguration

Dukascopy Bank Team Dukascopy Bank SA

"The GBP/USD could eventually test 1.25, which we would see as a sell level, that is unless the US dollar extends its correction, which is an unlikely scenario over the medium term, as the solidity of US economic growth will fuel inflation, in turn, the tightening of the Federal Reserve's monetary policy."

– Natixis (based on PoundSterlingLive)

Pair's Outlook
The GBP/USD currency pair confirmed yesterday's scenario, having climbed back above the 1.23 major level and even completely ignoring the immediate resistance at 1.2324. Friday brings a lot of uncertainty, as volatility direction is likely to be caused by Trump's speech during his inauguration later today. From a technical perspective we should see more upside movement, despite a group of strong resistances located just beyond the 1.24 handle. On the other hand, the US Dollar could receive a solid boost, with the Cable seen dropping as low as 1.21 in the worst case scenario.
Traders' Sentiment
Bulls keep retreating, as 69% of all open positions are now long (previously 71%). At the same time, the share of sell orders returned to its Wednesday's level of 52%, down from 55% on Thursday.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.2453
2. R2 1.2398
3. R1 1.2364
PP 1.2309
1. S1 1.2275
2. S2 1.2220
3. S3 1.2186

Author

Dukascopy Bank Team

Dukascopy Bank SA

Dukascopy Bank stands as an innovative Swiss online banking institution, with its headquarters situated in Geneva, Switzerland.

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