GBP/USD outlook: Lifted by strong data, but more work at the upside needed to verify positive signal
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GBP/USD
Cable rose further on Friday, following better than expected UK PMI data, while the near term action remains underpinned by weaker dollar.
Fresh strength cracked daily Kijun-sen (1.2414) and approached next barrier at 1.2455 (50% retracement of 1.2811/1.2099 bear-leg) but started to face headwinds here.
Potential risk of recovery stall is presented by overbought stochastic and 14-d momentum remaining in negative territory, although bias expected to remain with bulls while the price stays above broken 20DMA (1.2354, former significant barrier, reverted to support).
On the other hand, more optimistic outlook could be seen on weekly chart, where a reversal pattern has formed, keeping in play hopes for further recovery.
In such scenario, weekly close above broken Fibo resistance at 1.2371 (38.2% of 1.2811/1.2099) will be a minimum requirement to keep fresh bulls in play, with lift above 1.2455 (50% retracement) and 1.2500 (psychological / 10WMA) to verify signal.
Fundamentals may not work in favor of pound, as BOE is likely to cut rates next month, but elevated inflation and soft data from labor sector would further harm the outlook.
Res: 1.2455; 1.2500; 1.2539; 1.2557.
Sup: 1.2371; 1.2354; 1.2280; 1.2229.
Interested in GBP/USD technicals? Check out the key levels
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