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Is the Rally on GBPUSD Running Out of Steam?

GBPUSD
GBPUSD

GBPUSD extended its gains in yesterday’s trading, albeit at a slower pace than Friday. The currency pair reached an intraday high of 1.3149 before it pared some of its gains to finish at 1.3102. By the end of the New York session, GBPUSD had a 16-pip win for the day.

Generally Positive Data from the US

The rally on GBPUSD was somehow dampened by the reports released from the US. For one, the Chicago PMI for December printed better than expected at 48.9 versus the 48.2 forecast. This reading was also better than the 46.3 figure that we saw in November. While the report has not yet reached the 50.0 baseline figure that would indicate expansion, the reading still indicates improving economic conditions. Meanwhile, new home sales for November missed the 1.5% forecast when it printed at 1.2%. There was, however, an upward change made to the October reading from -1.7% to -1.3%.

CB Consumer Confidence report for December Due Today

For today, Conference Board will release its Consumer Confidence report for December at 3:00 pm GMT. The consensus is for the report to show that optimism on economic conditions improved this month with the forecast higher at 128.0 than November’s 125.5 reading.

Read our Best Trading Ideas for 2020.

GBPUSD Outlook

On the 4-hour time frame, GBPUSD is currently testing resistance at the 100 SMA and 38.2% Fib (when you draw the Fibonacci retracement tool from the high of December 13 to the low of December 23). A bullish close above yesterday’s high at 1.3149 could mean that the currency pair is on its way to test its December highs around 1.3513. On the other hand, a bearish close below the consolidation at 1.3084 would set the 200 SMA as near-term support at 1.3015. If support at the moving average does not hold, GBPUSD could find a bottom around its December 23 lows at the 1.2900 handle.

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