June 19, 2014 – GBP/USD (daily chart) has tentatively broken out above major 1.7000 resistance to establish almost a five-year high, a level not reached since the 1.7041 high back in August 2009. This breakout has surpassed the 1.7010 high that was hit earlier this week and has confirmed a continuation of the steep bullish trend that has been in place since the 1.4800-area low almost a year ago in July of 2013. As of this writing, the currency pair has reached up to within only a handful of pips from the noted 1.7041 high. Any further upside momentum could quickly establish a high not seen since October 2008.
For almost a year, the British pound has exhibited remarkably enduring strength against the U.S. dollar, as compared with other major currencies. This strength has continued while the euro has showed much less stellar gains and has recently faltered. If GBP/USD can maintain its strength above the key 1.7000 level, which may soon transform into support rather than its previous role as resistance, a major upside target resides around the 1.7250 resistance level. A failure to stay above 1.7000 could see the currency pair fall back towards the 1.6700 support level.
James Chen, CMT
Chief Technical Strategist
City Index Group
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