GBP/USD bulls hope US prices have cooled, eye break of 1.2520

GBP/USD bulls hope US prices have cooled, eye break of 1.2520

  • GBP/USD bulls are stepping in at a key structure area on the charts. 
  • All eyes will be on the US inflation data on Wednesday in the main. 

GBP/USD has traveled within a range of 1.2379 and 1.2456 on the day and is up around 0.3% currently at 1.2420. 

The British pound has found solid ground in a key support area amidst improved risk sentiment, helping to keep sterling towards the 10-month high it reached last week as traders bet that interest rates would soon peak and come down later this year.

Domestically, the Bank of England Governor Andrew Bailey is scheduled to speak on Wednesday and could give clues on the future path for monetary policy, but attention is on the US Consumer Price Index also. Analysts at TD Securities argued that core prices likely cooled off modestly in March, which could result in an even softer US dollar leading to higher Cable. 

Meanwhile, the following illustrates the technical landscape leading into tomorrow´s events:


GBP/USD technical analysis

GBP/USD is trading within the right-hand shoulder of a massive inverse head and shoulders pattern, testing the neckline.

GBP/USD bullish/bearish scenario

The price had dropped for four consecutive days and retraced over 70% of the prior bullish impùlse. Bulls are moving in following a close above the 61.8% Fibonacci retracement measure which is bullish. A higher high could be on the cards for this bull cycle. However, the price is on the backside of the bull trendline which means the bull cycle has been decelerating. If bears commit heavily to the next bullish thrust, a period of distribution could unfold. 1.2270s will be key in this regard ahead of 1.2190. However, the above thesis is meanwhile bullish:

GBP/USD H1 chart

On the lower time frames, such as this hourly chart, we can see the price is testing 1.2400 structure but so long as this holds, given the break of the trendline to the upside, a break of 1.2450 will likely leave the bulls in control for a run to test the 1.2520s.

If on the other hand, considering the break of the prior bullish trendline, if bears commit below 1.2450, then a bearish thesis will be in play to break below 1.2400:

GBP/USD bullish scenario

However, the bullish thesis will be in play while above support and 1.2350 as per the above daily chart. All will depend on the US consumer Price Index outcome for the US session and beyond ahead. 

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.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *