- GBP/USD has pulled back after touching resistance from the 200-week SMA.
- The pair could be forming an ABC move on the daily chart with a target in the 1.3000s.
- The 4-hour chart is looking a little vulnerable but remains supported for now.
GBP/USD has been rallying higher but it has stalled at the start of the new week after touching resistance at the 200-week Simple Moving Average (SMA). So far, the pullback looks like a correction in an evolving uptrend.
Pound Sterling vs US Dollar: Weekly chart
The pair has probably formed a bullish three-wave ABC Measured Move. If so, we are currently in the middle of the C wave, which should end somewhere between 1.3045 – 61.8% Fibonacci extension of wave A – and 1.3340, which is where C is 100% of A. The July highs in the 1.3130s is another target for the end of C.
Pound Sterling vs US Dollar: Daily chart
A strong, decisive move back above the 1.2890 highs could provide the confirmation of an extension of C to its target.
The 4-hour chart below shows a less bullish short-term technical picture.
Pound Sterling vs US Dollar: 4-hour chart
GBP/USD has started to slide lower, reversing the rising peaks and troughs. The Moving Average Convergence Divergence (MACD) indicator has also crossed below its signal line offering a bearish sell signal.
The short-term uptrend is, therefore, a little in doubt, however, the fact that momentum on the way down from the March 8 peak has been slower than on the way up continues to favor a pullback rather than reversal thesis.
It is possible this pullback could continue lower to support between 1.2730 (from the 200-4hr SMA) and 1.2680, before turning around.
Traders should watch for a bullish candlestick reversal pattern or peaks and troughs climbing again for a sign the dominant uptrend is resuming. A break above 1.2860, if accompanied by strong momentum, would also suggest bulls are back in the saddle, with targets at the aforementioned ends of Wave C.
A clean break below 1.2680, however, would suggest the trend on a short-term basis has reversed and the pair was going lower again, probably to a target zone back in the lower 1.2600s where the pair was rangbound during February.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats from daily highs, holds above 1.0800
EUR/USD loses traction but holds above 1.0800 after touching its highest level in three weeks above 1.0840. Nonfarm Payrolls in the US rose more than expected in June but downward revisions to May and April don't allow the USD to gather strength.
GBP/USD struggles to hold above 1.2800 after US jobs data
GBP/USD spiked above 1.2800 with the immediate reaction to the mixed US jobs report but retreated below this level. Nonfarm Payrolls in the US rose 206,000 in June. The Unemployment Rate ticked up to 4.1% and annual wage inflation declined to 3.9%.
Gold approaches $2,380 on robust NFP data
Gold intensifies the bullish stance for the day, rising to the vicinity of the $2,380 region following the publication of the US labour market report for the month of June. The benchmark 10-year US Treasury bond yield stays deep in the red near 4.3%, helping XAU/USD push higher.
Crypto Today: Bitcoin, Ethereum and Ripple lose key support levels, extend declines on Friday
Crypto market lost nearly 6% in market capitalization, down to $2.121 trillion. Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) erased recent gains from 2024.
French Elections Preview: Euro to “sell the fact” on a hung parliament scenario Premium
Investors expect Frances's second round of parliamentary elections to end with a hung parliament. Keeping extremists out of power is priced in and could result in profit-taking on Euro gains.