GBP/USD Forecast: bullish as long as above 1.3040

The GBP/USD pair trades around 1.3070, retreating from the yearly high set last Friday at 1.3113, with the dollar benefiting partially from quiet Monday trading. There were no major macroeconomic news in the UK, although overnight, the Rightmove house price index showed that prices have risen 0.1% this month, and 2.8% per from a year earlier, better than the 04% decline in June.  The UK has a pretty busy week, with the release of several relevant figures, starting on Tuesday with inflation figures for June, and retail sales for the same month next Thursday.

The pair stands anyway at  yearly highs, and the downside potential is limited as long as the price remains above 1.3047, May's high. In the 4 hours chart, technical indicators are correcting lower from extreme overbought levels, heading south but still far above their mid-lines, whilst the 20 SMA maintains a strong bullish slope, indicating the ongoing intraday decline is corrective. Further confirming it is the fact that the price holds above the 23.6% retracement of its latest bullish run at 1.3040, reinforcing the support level.

A downward acceleration through the 1.3040 area could see the pair extending its bearish correction towards 1.3000, but unless some negative news coming from the UK, seems unlikely that the greenback will be able to advance further. Beyond 1.1315, on the other hand, the pair has room to extend its advance up to 1.3160 during the upcoming sessions.

View live chart of the GBP/USD

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