Just like most of the major currency pairs, GBPUSD is enjoying a bullish start to today’s trading on the back of USD weakness. As of this writing, the currency pair is up by 0.30% as it trades at its 4-month highs at 1.2832.
This week is going to be a relatively quiet one for the GBP in terms of economic data. However, the opposite is true for the US dollar. A handful of top-tier events are scheduled from the US this week which would include the FOMC rate decision and US GDP. With that said, GBPUSD will likely take its cue from the market-moving events scheduled for release from the US.
On Wednesday, it is widely expected that the Federal Reserve will keep its interest rates and quantitative easing program unchanged. However, it would seem that today’s USD weakness reflects some concerns that the Fed may sound pessimistic of the economy’s outlook.
On the daily time frame, it can be seen that GBPUSD is trading above its June 10 highs at 1.2846. A strong close around its current level or higher could mean that there are enough buyers in the market. The currency pair may soon then rally to its next resistance level at 1.3199.
On the other hand, if GBPUSD is unable to close above its June 10 high, it may mean that buyers are running out of steam. The currency pair could then trade lower to 1.2696. This price could provide GBPUSD with support as it aligns with the rising trendline (from connecting the lows of June 29 and July 20). If support at this level does not hold, we could soon then see GBPUSD fall to 1.2405 where it could test the 100 SMA.
GBPUSD, Daily Chart