Currently, GBP/USD is trading at 1.2902, up 0.43% on the day, having posted a daily high at 1.2918 and low at 1.2839.
GBP/USD has been trading in a chop into and out of the supply from the 1.29 handle in late European trade. The pound is sensitive and could move with momentum when it gets going, and that is exactly what we have seen over many session of late. The main crutch to the bulls come with renewed positive sentiment around PM May's calling for a snap election. This underpins the likelihood of negotiations going in favour of the UK with Westminster and the nations behind Brexit presuming the Conservatives will win of course.
There were no real clues behind the sudden move that rallied to fresh multi-month tops on the 1.29 handle and to the highest level since early October 2016. Simply, the momentum in the dollar's decline overnight (Trump NAFTA/tax plan related) cemented the upside for sterling from 1.2860 while DXY dropped from the highs of 99.3310 to 99.10.
US data has been mixed, although Durable goods were lower than expected and will weigh on the dollar. In respect t housing, “We expect housing to support U.S. economic growth in the first quarter and look for residential investment to rise at a 10.5 percent annualised rate in Q1,” explained analysts at Wells Fargo.
- US Durable Goods Orders: Lower than expected in March, recovery in business spending intact - Wells Fargo
- US Pending Home Sales: Despite March’s decline, index remains at a solid level - Wells Fargo
- US Dollar Index finds resistance again at 99.15/20
- UK: Surprising strength into 2017 is likely to falter - Westpac
- Moody's: Macroeconomic conditions in the UK remain firm overall
Next major risk factors are the UK and US GDP:
Is the United State economy in good shape? GDP LIVE Coverage and Forex analysis
GBP/USD levels
The outlook is bullish according to Valeria Bednarik's technical readings. "The pair has scope to accelerate above 1.2920 towards 1.2960 first, and up to 1.2710 later on the day, should the greenback remain pressured," she explained. "In the 4 hours chart, technical indicators have lost momentum, but the RSI holds around 70, whilst the 20 SMA gains upward strength below the current level, providing support at 1.2830."
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