GBP/USD: Sterling Logs Third Day of Gains to Cross 200-Day Moving Average at $1.2560

Sterling is showing renewed strength but is faced with long-term resistance right at current market prices. Where to next?

• The GBPUSD pair advanced for a third straight day on Monday and remained near its weekly highs in early Tuesday deals. The currency rate jumped about 0.5% to start the week, and — more importantly — indicated it may be gearing up for a fresh new leg higher. The British pound closed the day going for $1.2560, a level that topped a long-term indicator, the 200-day simple moving average (SMA).
• The 200-day SMA is used by technical analysts who seek to gauge the long-term trend of an asset. It traces the average price over the last 200 days. If the current market price is trending below that line, the trend is considered bearish over the long term. And vice versa — a price above it suggests a shift in momentum and a possible beginning of an upside swing. Still, for that signal to be fulfilled, current market price needs to close a full candle above (or below) the 200-day SMA.
• Looking ahead, markets are eyeing the next big thing that could stir things up and generate new volatility. Inflation data from the US is on deck Wednesday with the consumer price index report for April. Analysts expect a 3.4% increase in prices, down from 3.5% in March. Any surprises could send traders and investors scrambling to rearrange their deals.