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The British pound is testing back towards the 1.3700 level against the US dollar after monthly jobs data from the United Kingdom came in better than analysts had been expecting. Sterling rose back towards the best levels of 2020 as the official unemployment rate ticked lower.
Headwinds from strength in the US dollar earlier this week also subsided, as the US dollar index started to give back a sizable portion of Monday’s gains. The GBPUSD pair is once again threatening to break into a much higher trading range.
Traders now face a serious dilemma. Do they attempt to position themselves for more sterling strength or do they wait until the Federal Reserve monetary policy meeting is out-the-way on Wednesday?
The current technicals surrounding the GBPUSD pair certainly support the notion that a much higher trading range between the 1.3700 to 1.4000 region could be carved-out over the coming weeks and months.
Technical analysis also highlights that a number of British pound crosses are looking bullish at this stage. EURGBP in particular is flagging potential weakness, which could mean the British pound is due for another bout of renewed strength.
Another unlikely correlation is also highlighting further strength for GBPUSD. I have noticed that sterling has an increasingly positive price correlation with the S&P 500 index. The S&P 500 looks well supported on dips and could certainly be headed towards 4,000 in the not-too-distant future. This could be bullish for the GBPUSD pair.
Another positive factor supporting GBPUSD is traders sentiment. According to the ActivTrades Market Sentiment indicator, some 73 percent of traders are bearish towards the pair at this current moment.
This could be a major positive for the GBPUSD pair as retail traders typically lean against established uptrend, just like the current medium-term uptrend the pair finds itself trading in now.
GBPUSD Short-term Technical Analysis
The four-hour time frame shows that that the short-term trend remains bullish while price trades above the 1.2570 level. According to the Parabolic SAR indicator the next major upside move should take place once the 1.3720 level is broken.
Any technical pullbacks should be considered buying opportunities, placing the 1.3670 to 1.3660 level as a potential buying spot if the GBPUSD pair falters from the 1.3700 benchmark level again.
Key targets for the GBPUSD pair above the 1.3720 level are found at 1.3770 and 1.3850 levels. If bulls breach 1.3850 then I suspect 1.3980 will quickly come into focus.
Source by ActivTrader.
GBPUSD Medium-term Technical Analysis
The daily time frames continue to show that the bullish trend remains strong while the price trades above the 1.3500 level. An extremely large, inverted head and shoulder pattern remains in play while the GBPUSD pair trades above the neckline support.
According to the overall size of the bullish price pattern sterling is probably headed close to the 1.4150 handle over the medium-term horizon. With market sentiment remaining on the bearish side, traders really do need to be careful selling this pair while it trades above the 1.3500 handle.
Source by ActivTrader.
