The British pound currency has started to breakout against the US dollar as the greenback falls broadly on the currency market due to the notion that Fed members are turning more dovish on rates after recent PPI and CPI inflation figures.
Yearly highs were seen in the EURUSD and the GBPUSD pairs as the buck cratered, now the GBPUSD pair is also starting to move into a new higher long-term range.
Yesterday’s data from the US showed Producer prices for final demand in the US fell 0.5% mom in March of 2023, the biggest decline since April of 2020, compared to forecasts of a flat reading.
It can also be said that short-term breakout happened from the range of 1.1800 to 1.2447. The risk would be for sterling bears would be a sustained break this established range and breaking much higher towards 1.3000.
Looking at sentiment data and how traders feel about sterling, the ActivTrader Market Sentiment tool shows traders are still bearish despite the recent sharp price rise.
With 39% of traders currently bullish it should be noted that this current sentiment reading is highlighting that sterling still has much scope to trade even higher also.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame, a clear price range breakout has emerged for sterling, with the break happening above the 1.2447 level.
However, I would expect that we could soon see a rally back to 1.2800 at some point, and then either a continuation or some type of major price reversal.
GBPUSD Medium-term Technical Analysis
According to the daily time frame it shows that that GBPUSD pair is starting to move into a new trading range after breakout out above the top of its short-term range.
According to the technical analysis a breach of the 1.2650 level is needed in the daily time frame to see if it’s not a false breakout if not we see 1.2800 or 1.3000 tagged.