GBP/USD Forecast: With break above $1.3850, next target is $1.4000

Mario Blascak, PhD Independent Analyst

After reaching a new post-Brexit high of $1.3940 overnight, the GBP/USD corrected lower towards round big figure of $1.3800 just to gain back about half of the retracement to trade at $1.2860.

With no news on the macro calendar scheduled for Thursday, the GBP/USD is driven by market sentiment, especially concerning the US Dollar as the US is facing the government shutdown since January 19 should the US Congress fail to avert the issue by increasing the debt ceiling.

Technically the GBP/USD busted the resistance at $1.3850 representing 61.8% Fibonacci retracement line of post-Brexit slide lower. Although GBP/USD failed to close on Wednesday above that key resistance line, the push higher for GBP is very strong as the currency pair has managed to break above that level easily multiple time during the day.

The FXStreet confluence indicator that analyses multi-factor coincidence of different technical barriers points to $1.3890 as a near-term resistance on a 15-minute chart while longer-term picture sees no big barrier for GBP/USD until round big figure of $1.4000. Failure to close above $1.3850 will bring $1.4000 as next target for traders.

FXStreet 15 minutes and daily confluence indicators

With technical hurdle already busted at $1.3850, the oscillators are painting picture of a corrective move sideways with both Slow Stochastics and the Relative Strength Index moving downwards from the Overbought territory. The momentum indicator is also pointing downwards on a daily chart.

GBP/USD daily chart

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

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