GBPUSD Analysis: Correction anticipated

Dukascopy Bank Team Dukascopy Bank SA

"While it remains very difficult to pin down a fixed schedule for Trump tax reforms, it now appears anything phenomenal will now be delayed. Such policy drag should, at some stage, open up stock markets to disappointment and limit dollar strength."

– Commonwealth Bank (based on Reuters)

Pair's Outlook
The Cable not only reached its target on Thursday, but even managed to close trade at the highest level in nearly three weeks. However, the reason for the substantial rally was not the Sterling's strength, but US Dollar's weakness. Consequently, a bearish correction could easily occur today, with the exchange rate retreating towards 1.25—where the 20-day SMA and the weekly R1 rest. Technical studies, on the other hand, suggest another positive outcome is due, in which case the main target would be the resistance area around 1.2613, formed by the upper Bollinger band and the weekly R2.
Traders' Sentiment
Bulls gained some numbers over the day, as now 61% of all open positions are long, compared to 57% on Thursday. Meanwhile, the number of sell orders remains unchanged at 53%.

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

1. R3 1.2584
2. R2 1.2533
3. R1 1.2502
PP 1.2452
1. S1 1.2421
2. S2 1.2371
3. S3 1.2340

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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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