“¢ A fresh wave of USD selling triggers some short-covering bounce in the past hour.
“¢ Technical buying provides an additional boost and remains supportive of the up-move.
A quickly wave of USD selling emerged over the past hour or so, lifting the GBP/USD pair sharply higher to mid-1.2700s, or fresh session tops.
The latest leg of sharp uptick lacked any obvious trigger and could be attributed to a follow-through US Dollar selling, in what could be categorized as a rather late reaction to today’s worse than expected US economic data – housing starts and Philly Fed manufacturing index.
Adding to this, some aggressive short-covering, especially after bulls showed remarkable resilience below the 1.2700 handle through the early North-American session, could also be one of the key factors providing an additional boost to the major.
The pair has now cleared an important barrier near the 1.2730-35 region, marking neck-line hurdle of an inverted head & shoulders – bullish reversal chart pattern formation on the 1-hourly chart. Hence, a follow-through up-move, led by some fresh technical buying, now looks a distinct possibility.
Technical levels to watch
Immediate resistance is pegged near the 1.2765-70 region, above which the pair is likely to aim towards reclaiming the 1.2800 handle before eventually darting towards weekly tops, around the 1.2825-30 region.
On the flip side, any meaningful retracement slide might continue to find immediate support near the 1.2700-1.2690 region, which if broken might turn the pair vulnerable to resume with its prior depreciating slide.
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