GBPUSD: ‘British Pound Could Continue to Advance to 1.3035’ – UOB
The GBPUSD pair is little changed today as traders wait for more economic data from the UK. It is trading at 1.2986, which is a few pips below the intraday high of 1.3000.
The British pound has been on an uptrend in recent days as investors remain optimistic about Brexit. While the eighth round of talks in Brussels ended without a deal, analysts remain hopeful that the two sides will make more concessions. In a statement during the weekend, Boris Johnson and Ursula von der Leyen said that the two sides will continue talking and narrowing the existing gaps.
The GBPUSD has also received strong support from the overall weaker US dollar. The greenback has been falling this month and is currently in a two-week low. That decline is because risks in the US have declined slightly because Donald Trump’s health has improved.
Strong data from the UK have also supported sterling. Yesterday, data from Markit showed that the services PMI declined to 56.1 in September from 58.8 in the previous month. Nonetheless, this decline was better than the 55.1 that analysts were expecting. By it being above 50, it meant that the sector is in an expansionary phase. The composite PMI also remained above 50 in September.
Today, the GBP/USD pair will react to the construction PMI data from the UK. Analysts polled by Reuters expect the data to show that the PMI declined to 54.0 from 54.6 in the previous month.
“Upward momentum has improved further and GBP could continue to advance to 1.3035. For today, the next resistance at 1.3070 is likely out of reach. Support is at 1.2950 followed by 1.2925.”
GBPUSD technical outlook
The four-hour chart shows that the GBPUSD pair has been in a strong uptrend after it found support at 1.2687 in the final week of September. The uptrend is being supported by the ascending green trendline and the 25-day exponential moving average.
Most importantly, the pair has found strong resistance at the 1.3000 level. As you can see, its previous uptrend met resistance at the same level. Therefore, I suspect that the pair will break-out above this resistance and advance towards 1.3070