Since the beginning of this week, GBP/USD has been making convincing gains above its range. And, earlier in U.S. session today, the pair topped at 1.6157. Will it
come down or continue climbing the charts?
U.K’s preliminary report released today at 8.30 am GMT failed to meet consensus in the market. The report came in at -0.2% against
an earlier projection of 0.1%. Since the number came in negative, pound sell-off was triggered in the market, and it lost considerable ground against the other
major pairs. In the previous GDP report, the country also reported a negative figure. Therefore, since it has experienced two straight quarters of
contraction, investors are now pointing to a possible technical recession in the country. This may lead to continued poor performance of the pound in the
coming days.
As earlier mentioned, technical analysis on the GBP/USD reveal that it is experiencing an upside break from its range. Immediate resistance for the pair is found at 1.6170. A convincing break above this area could see it test 1.6250. On the flip side, immediate support is found at 1.5970. A convincing break above this area could see it test 1.5800.
Medium term traders who were long in the pair should hold on to their positions as long as the breakout is still convincing. Short term traders would rather wait for all this drama and the earnings season to end before having a fresh call on the pair. The fundamental condition is still favoring pound sell-off, so long term traders can still take this opportunity to harvest massive profits.
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