Downside risks dominated the Pound during the first part of Friday’s trading session. This fall was stopped mid-session when the rate reversed from the 1.3130 mark and subsequently surged 112 pips within a couple of hours. The rate breached the 55–, 100- and 200-hour and 55– and 100-period (4H) SMAs along the way which might point to further advance.
The nearest resistance is formed by the 200-period moving average at 1.3270 which might still put bearish pressure on the Sterling and thus limit gains today. Technical indicators flash bearish signals. A fall, however, should likewise be restricted by the above SMAs located slightly above the 1.32.
The ultimate low in this session is likely to be the weekly S1 at 1.31, while bullish gains should not exceed the 1.33 level.
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The GBP/USD exchange rate remained steady on Monday apart from some minor fluctuations mid-session. The pair was trading in a very narrow range between the monthly PP and weekly PPs. This demonstrates the equal force of bulls and bears none of which were able to set the direction during this time.
If looking on the 4H chart, it seems that this lack of direction might continue in this session, as well, as the Pound remains stranded between the 55-, 100– and 200-period SMAs in the 1.3212/65 area.
Considering the nearby-located support barrier on the hourly time-frame, it is more likely that the pair tries to move higher today if no negative fundamentals change this assumption. The nearest resistance is a channel line or the weekly R1 at 1.3300 and 1.3365, respectively.
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Downside risks prevailed in the market on Tuesday, thus sending the British Pound to crashed by 198 base points or 1.49% against the US Dollar. This decline, however, was due to the general strength of the Greenback against other major currencies and the Sterling is no exception. Given that the 55-,100-, and 200-hour SMAs is located above the price, it is likely that the currency pair might continue its decline today. Nevertheless, it seems that this strong bearish momentum has exhausted the strength of bulls. This could introduce the bullish sentiment within this trading session.
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Despite hindering the pair for several hours, the weekly S1 was eventually breached at 1.3106 early on Wednesday. Bearish momentum was strengthened by rather sluggish UK CPI data which sent the Pound for a 44-pip hourly plunge.
This paved the way for a fall down to the eight-month low and the monthly S1 at 1.3020, thus resulting in a southern breakout of a two-week channel down. The rate has since recovered and been moving towards the 55-hour SMA at 1.3130. The 100– and 200-hour SMAs are likewise located nearby—resistance which is likely to limit gains today.
Upside potential is apparent until 1.32 although the pair might not reach as high. In case of some bearish movement, the aforementioned 2018 low should work as an unbreakable support.