GBP/USD Forecast: Buyers eye a break above 1.2440
- GBP/USD edges higher after finding support at 1.2400.
- Near-term technical outlook points to a bullish tilt.
- A four-hour close above 1.2440 could attract bulls.
GBP/USD gathered bullish momentum in the European morning and climbed toward mid-1.2400s. The pair faces strong resistance at 1.2440 and it could stretch higher once that level is confirmed as support.
Although GBP/USD dropped below 1.2400 for the third straight day on Wednesday, it quickly reclaimed that level, with the US Dollar (USD) struggling to preserve its strength. The pair's recent rebound, however, looks to be fuelled by a technical reaction amid a lack of fundamental drivers.
In the second half of the day, the US Census Bureau will release the Goods Trade Balance data for April. The Federal Reserve's Consumer Credit Change data will also be featured in the US economic docket. Nevertheless, market participants are unlikely to base their positions on these figures ahead of next week's all-important inflation report and FOMC policy meeting.
Hence, markets' risk perception and technical developments could continue to affect GBP/USD's movements during the American trading hours.
At the time of writing, US stock index futures trade virtually unchanged on the day following the modest decline seen in the Asian session. In case Wall Street's main indexes open in positive territory and push north, GBP/USD could extend its rebound and vice versa.
GBP/USD Technical Analysis
GBP/USD was last seen trading near 1.2440, where the Fibonacci 38.2% retracement level of the latest downtrend is located. If the pair starts using that level as support, it could target 1.2480 (200-period SMA, Fibonacci 50% retracement) and 1.2500 (psychological level) next.
On the downside, 1.2420 (100-period Simple Moving Average (SMA), 50-period SMA, ascending trend line) aligns as first support before 1.2400 (psychological level) and 1.2360 (static level).
The Relative Strength Index (RSI) indicator on the four-hour chart rose slightly above 50, reflecting the bullish tilt in the short-term outlook.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
