GBPUSD: GBP to USD Rally Takes a Breather – But Path to 13220 Remains
The GBP to USD (GBPUSD) price is little changed today as traders wait for key statements by Andrew Bailey and other monetary policy committee members. It is trading at 1.3145, which is slightly below yesterday’s high of 1.3177.
The key economic data that will have an effect on the GBPUSD price is the existing home sales numbers from the United States. Analysts polled by Bloomberg expect the data will show that the existing home sales rose by 300k to 6.3 million.
Another data that will have an impact on the pair is the initial and continuing jobless claims numbers from the US. Economists expect that the numbers will show that initial claims fell to 860k while continuing claims fell from 10 million to 9.5 million.
The biggest catalyst for the GBP to USD will be a speech by Bank of England (BOE) governor, Andrew Bailey. Andrew Aldane, the deputy governor will also talk.
Analysts expect that the governor will address the key issues affecting the British economy and the key options available to the bank. Notably, they expect that the BOE will slash interest rates and boost its asset purchases before the end of the year.
That is because the British economy is still going through risks. There is still the risk of a no-deal Brexit and the country’s public debt is rising, as evidenced by data released yesterday. Also, the rate of inflation remains low and the number of Covid-19 cases has continued to increase.
So, how will the GBPUSD react today? Analysts at UOB Bank expect that the pair will continue rising today, with the next target at 1.3220. They have a support target of 1.3180. They wrote:
“While GBP could strengthen further, severely overbought conditions is likely to lead to a slower pace of advance and the next resistance at 1.3220 could be out of reach for now.”
GBP to USD technical outlook
On the four-hour chart, we see that the GBPUSD price rose sharply yesterday. Today, it is in a consolidation mode because as traders start questioning the next moves. The price remains above the short and medium-term moving averages. It has also turned below the first resistance level of the Andrews Pitchfork.
The GBP to USD is also between the 50% and 61.8% Fibonacci retracement level. Therefore, I suspect that the pair will resume the bullish trend with the next support being at 1.3220. On the flip side, a move below 1.3085 will invalidate this bullish turn. This price is the previous October high.