- GBP/USD has popped up through the 21-4hr SMA on a better bid start to the week following an initial opening spike in Asia of 20 pips (capped by 100-hr SMA).
- The price action in late London bid the pound up from 1.3106 to 1.3151.
GBP/USD is lining up for a break of the descending resistance line, supported by the 10-D SMA. In terms of positioning, the GBP shorts, however, have continued to push further into negative territory and reached their highest level since September 2017 last week according to the CFTC Commitment report.
The key risk which is capping bullish attempts, making for a fade at the descending resistance line since 8th July highs comes with the UK political uncertainty, despite better UK economic data that had been bolstering the market’s confidence of an August 2nd BoE rate rise this week.
BoE outlook
Analysts at TD Securities explained that the BoE is expected to deliver a rate hike, though GBP will have to contend with Brexit headlines and broader USD trends:
“We think the USD has reached peak optimism, leaving GBP some room to benefit from the hike, especially as valuations look clean. Next key level to watch is 1.32. The EUR price action remains lackluster, sticking to the well-contained 1.1550 to 1.1850 range.”
GBP/USD levels
On a break of the 21-D SMA, 1.3200 guards the 50-D SMA is now located at 1.3244. Beyond there 1.3461/80 comes before the convergence of the 200-D SMA (1.3581) and 1.3597/1.3600. The 1.3708 level at the 50% Fib of 1.3040-1.4377 remains compelling on the wide. However, recent ranges remain a powerful centre of gravity and the descending support line is located down at 1.2957. Directly below there comes the Fibonacci support at 1.2918, (50% retracement of the move up from 2016).
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