GBP/USD regains traction after correction pauses [Video]

Stefanos Oikonomidis XM

GBPUSD has been in a prolonged uptrend since October 2022 supported by its long-term ascending trendline. In the near term, the pair experienced a pullback from its 14-month high of 1.2847, but it quickly found its feet and reversed back higher.

Despite the recent downside correction, the momentum indicators are tilted to the bullish side. Specifically, the RSI is flat after bouncing off its 50-neutral mark, while the stochastics are edging higher following their bullish cross near the oversold territory.

If the latest rebound extends, the focus could turn to the recent 14-month peak of 1.2847. Jumping to a fresh multi-month high, the price might encounter resistance at the crucial 1.3000 psychological mark. Surpassing that zone, the pair might ascend towards the March 2022 low of 1.3160, which could serve as resistance in the future.

Alternatively, if the price reverses lower, the recent support of 1.2590 could act as the first line of defense. Should that floor collapse, the pair may face the ascending trendline that connects its lows since October 2022 and the 50-day simple moving average before the 1.2445 resistance gets tested. A violation of that region could set the stage for the May bottom of 1.2307.

Overall, GBPUSD appears to have undergone a healthy correction due to reaching overbought conditions, with its positively charged SMAs painting a bullish technical picture. Therefore, it is likely that the pair extends its structure of higher highs as long as it holds above the ascending trendline.

Author

Stefanos Oikonomidis

Stefanos joined XM as a Junior Investment Analyst in September 2021. He conducts daily market research on the currency, commodity and equity markets, from a fundamental and a technical perspective.

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