GBP/USD Clears January High After Closing Above 50-Day SMA
GBP/USD extends the recent series of higher highs and lows to clear the January high (1.2576).
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US Dollar Outlook: GBP/USD
GBP/USD extends the recent series of higher highs and lows to clear the January high (1.2576), and the exchange rate may further retrace the decline from the December high (1.2812) as it closes above the 50-Day SMA (1.2477) for the first time since October.
GBP/USD Clears January High After Closing Above 50-Day SMA
GBP/USD rallies to a fresh yearly high (1.2630) as the US Retail Sales report shows a 0.9% contraction in January versus forecasts for a 0.1% decline, and signs of a slowing economy may continue to produce headwinds for the Greenback as it puts pressure on the Federal Reserve to further unwind its restrictive policy.
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In turn, speculation for lower US interest rates may keep GBP/USD afloat ahead of the next Fed meeting in March, and a further advance in the exchange rate may continue to push the Relative Strength Index (RSI) towards overbought territory as it climbs to its highest level since September.
With that said, GBP/USD may no longer track the negative slope in the 50-Day SMA (1.2477) as it closes above the moving average for the first time since October, but lack of momentum to extend the bullish price series may keep the exchange rate below the December high (1.2812).
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView
- GBP/USD climbs to a fresh yearly high (1.2630) after carving a bullish engulfing candlestick earlier this week, and a break/close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region may push the exchange rate towards the December high (1.2812).
- A breach above 1.2820 (38.2% Fibonacci extension) opens up the 1.2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension) zone, but the recent series of higher highs and lows may unravel should GBP/USD struggle to break/close above the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region.
- Need a move below the 1.2390 (38.2% Fibonacci extension) to 1.2446 (May low) zone to bring the 1.2300 (50% Fibonacci retracement) to 1.2310 (61.8% Fibonacci extension) region back on the radar, with the next area of interest coming in around the monthly low (1.2249).
Additional Market Outlooks
USD/JPY Pulls Back Ahead of Monthly High to Halt Three-Day Rally
AUD/USD Eyes January High Ahead of RBA Rate Decision
Gold Price Forecast: RSI Still Sits in Overbought Territory
EUR/USD Recovers as Chair Powell Remains Willing to Adjust Policy
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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