28, October 2016

GBP/USD (a 4-hour chart)

General overview

The better-than-expected GDP report temporally supported the pound. The sterling was able to strengthen across the board. However, the US dollar quickly reversed its losses, limiting the further pound gains.

Current situation

The GBP/USD remained within a narrow range not far from the 1.2200 support level during the day on Thursday. Its latest recovery was stopped around the mark 1.2150 which knocked-off the rate downwards. The pound spent the night at the 1.2200 handle and slightly strengthened in the mid-European session. The GBP/USD weakened in the North American session. The sterling bounced from the 50-EMA, around 1.2200 in the 1 hour chart. The GBP/USD moved upwards and broke the 200-EMA in the same chart. The 50 and 100 EMAs are neutral, while the 200-EMA is moving downwards. The current resistance is seen at 1.2300, the support is at 1.2200.

MACD indicator is at the centerline. If the histogram enters the positive territory, that will indicate buyers’ growing strength. If MACD returns into the negative area the sellers will take control over the market. RSI moved towards the oversold area.

Trading recommendations

If the GBP weakness persists the GBP/USD pair will get below 1.2200. In this scenario, sellers will move the price towards 1.2100. A move above 1.2300 would ease the downward pressure. Buyers will be able to push the price to 1.2350.