By Forex Signs, Inc.
GBPUSD has gradually formed a minor bullish channel after price fell to a low 1.5529 last Tuesday. Looking at the H1 time chart, price has gradually risen and now consolidates between support level 1.5613 and resistance level 1.5643. Today, bias for the pair is a buy position. Price is now testing the support level. If price falls below support level, this could be a bearish correction, testing the bottom line of the minor bullish channel. If price breaks below bottom line of the bullish channel, a continuation of the bearish channel from last Tuesday may continue. If price breaks above the resistance level, a continuation of the bullish channel is possible. RSI (14) for the H1 time chart shows price is within the neutral zone, suggesting that the pair may sustain its current bullish trend.
US Expected to Bounce After US Congress Approves Tax Deal
The US dollar is expected to rally against other currencies after the US congress approved the extension of the expiring tax cuts. Though economists sees this a gamble, the US officials deem it necessary to create jobs despite widening the US debt. The House of Representatives, on a 277-148 vote, passed the $858 billion package of renewed tax cuts and more unemployment benefits in an economy saddled with a nearly 10 percent jobless rate. The bill marked the second time in nearly two years that Congress rammed through a massive economic stimulus. The first one, President Obama’s $814 billion spending bill, was opposed by Republicans who complained about its impact on annual deficits, now hovering at about $1.3 trillion annually. With the economy performing poorly and a year-end tax increase looming, there were none of the customary congressional hearings that normally precede debate on major legislation, and few if any complaints that lawmakers had not had enough time to review the legislation.
Though there are no market moving data for the upcoming session, reports from the euro zone may offer pieces of information which could trigger another round of risk aversion that may push the dollar up against other currencies.
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