GBP/USD ran into 1.3113 - resistance offered by the trend line sloping downwards from August 2015 high and May 2016 high. The currency pair closed above 1.31 handle on Friday for the first time since September 16, 2016.
The data docket in the US and UK is light, hence the broader market conditions and the technical factors could guide the GBP/USD market today.
Charts remain in favor of the bulls
· Bullish outside week candle
· Inverse head and shoulders breakout
The 50-DMA, 100-DMA & 200-DMA are perfectly aligned one below the other and sloping higher. The RSI is still short of the overbought territory, suggesting room for further gains in the pair.
GBP futures - Open Interest (OI) surges
The preliminary data published by the CME shows, Friday’s break above 1.30 and an end of the day close above 1.31 was accompanied by an addition of 10,952 contracts to the Open Interest in GBP futures. The OI activity suggests the spot is more likely to chew through the offers around the trend line hurdle of 1.3113.
FXStreet Chief Market Analyst Valeria Bednarik says, “Hopes for a softer Brexit keep the Pound bid”. Bednarik adds, “The daily chart shows that the Momentum remains above its 100 level with limited upward strength, but also that the RSI indicator heads sharply higher at 67 as the 20 SMA advanced below the current level, in line with additional gains for this Monday. In the 4 hours chart, technical indicators have eased partially, but remain within extreme overbought levels, while the price stands far above its moving averages. 1.3047, the previous yearly high is the immediate support, and as long as it holds, the risk will remain towards the upside.”
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