- Upbeat market sentiment has strengthened the Pound Sterling.
- A breakout of a VCP results in wider ticks formation and heavy volume.
- The formation of a Rising Channel indicates that the broader trend is towards the north.
The GBP/USD pair is displaying a sideways performance in the early Tokyo session after a juggernaut rally to near 1.2080. The Cable witnessed an immense buying interest after sustaining above the round-level resistance of 1.1900. A significant improvement in investors’ risk appetite strengthened the Pound Sterling.
Meanwhile, the US dollar index (DXY) has dropped 106.00 despite a firmer jump in the US Durable Goods Order data. It seems that less-hawkish cues on interest rate guidance from the Federal Open Market Committee (Fed) minutes have impacted the US Dollar. Investors should know that US markets are closed today on account of Thanksgiving Day.
On a daily scale, the Cable has delivered a breakout of a Volatility Contraction Pattern (VCP) that results in the formation of wider ticks and heavy volume. Broadly, a Rising Channel formation satisfies the condition of a long-term upside trend. Also, advancing the 20-period Exponential Moving Average (EMA) at 1.1738 adds to the upside filters.
Adding to that, the Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates that the upside momentum is active.
Going forward, the mighty 200-period EMA at 1.2110 could be a hurdle for the Pound Sterling bulls.
For further upside, the asset is required to establish firmly above the psychological resistance of 1.2000. But for a run-up, the Cable is needed to overstep the 200-EMA at 1.2110 firmly, which will drive GBP/USD towards the round-level resistance of 1.2200, followed by August 2 high at 1.2280.
On the flip side, a drop below Monday’s low at 1.1780 will drag the asset toward November 14 low at 1.1710. A slippage below November 14 low will expose the asset to the horizontal support plotted from October 27 high at 1.1646.
GBP/USD daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.