The GBPUSD pair regained the 1.30 level after trading as low as 1.2860 recently. It proves, once again, that the 1.30 is pivotal for the rest of the year, as it was during the last several months.
The big question at this point is if it manages to hold above the level. Also, is this a USD move or a GBP move? Judging by how the USD reacts on the FX dashboard, we may say that this is a USD move.
USD Weakens Ahead of the Election Day
The USD started today on a weak foot, despite the better than expected ISM Manufacturing data seen yesterday. The ISM Manufacturing literally obliterated the 55.6 forecast by coming out at 59.3.
It is a huge difference from what has been seen in the United Kingdom, where there PMI Manufacturing showed only 53.7 for the month of October. While both are in growth territory, there is quite a difference between the two. Also, one should not forget that the United Kingdom prepares for a month-long lockdown starting with Thursday, and the US does not plan one. Hence, the discrepancy between the two will only get more acute.
Yet, the USD is not rallying against the GBP because all eyes are on the US elections. As the US stock market futures rallied overnight, the USD is still weaker across the dashboard, losing against the GBP, EUR, or AUD.
GBPUSD Bullish Divergence
The GBPUSD formed a bullish divergence on the hourly chart against the RSI. In fact, we can call it a double bullish divergence as the market formed three lower lows while the RSI did not confirm the last two of them.
Also, the pair formed a falling wedge – another bullish clue suggesting that the pair will bounce back at least to the 1.30. Well, that level is here now, and the big question is – where will it go next?
Those favoring a contrarian view would like to sell against 1.3150 with a target below 1.28. However, the risk should be minimal, considering the volatility expected from the US elections.
GBPUSD Price Forecast