GBP/USD Fails To Hold 1.3800 Level As Brexit Overwhelms, Eyes on CPI
FxGrow | Jan 16, 2018 02:39AM ET
GBP/USD broke the consolidation sessions on Friday, breaking above 1.3500, and clocked 1.3819 high yesterday, a level the cable hasn't seen since Brexit. Today, the pair traded flat with 22-pips price action and 1.3804 high with failure to push forward, currently trading 1.3794 intraday ahead of UK's inflation (CPI y/y) which will be released shortly, along with Producer Price Index (PPI).
On the other hand, Brexit negotiations progress and its pace is still creating a high volatility for the Pound. Recent reports by the Guardian and BBC with headlines that PM May faces tougher transition stance from EU amid Norway pressure and the payments from UK to the EU on weekly basis is underestimated and should increase, said Boris Johnson.
Technically, last week bullish grabber candle suggests that further upside action should be taking into consideration on the long term if the cable managed to close above 1.3800 level. On Daily time frame, expectations for some consolidation sessions could from where GBP/USD coulld re-test 5-EMA at 1.3700 and 10-EMA at 1.3620. After that and depending on price the action behavior will give a better clue on how the pair will head. As for daily RSI, the indicator read above 70 level which makes the cable in an oversold market or head to that zone.
GBP/USD technical overview:
Closing price: 1.3789
Resistance: 1.3840+/- , 1.3970-5
Support: 1.3690, 1.3650-30, 1.3595*
Target price: 1.3850
Trend: Sideways / Up
Comment: Fri-Monday's explosive rally signals a breakout over the previous September high and opens potential for bull drives to 1.3970. Trade is poised for aggressive rallies. Near term corrective dips will likely find support in the upper edges of Friday's run. Narrow congestion over 1.3690+ should bull flag and setup for rallies. Only a close under 1.3595* rejects the breakout / bull trend.
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