GBPUSD recently bounced off its range support at the 1.3740 area and appears to be making its way back to the top at 1.3830. Technical indicators support a continuation of the bounce.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break. The 200 SMA lines up with the range support to add to its strength as a floor, but the pair is moving below the 100 SMA which could hold as dynamic resistance near 1.3800.

Stochastic has room to climb before reaching the overbought zone to signal exhaustion among buyers. This suggests that price could keep climbing before sellers take over. RSI also has room to move higher, so GBPUSD could follow suit until overbought conditions are met.

There are no major reports due from the UK economy, although it’s worth noting that the BOE is under pressure to hike interest rates in order to keep inflation in check. The threat of stagflation is strong in the UK, as growth remains weak while price pressures are elevated.

Meanwhile, the US dollar could take cues from the advanced US Q3 GDP release and core PCE price index due later in the week. A weaker growth figure of 2.6% is eyed after the economy posted a 6.7% expansion in the previous period. GDP models like that of the Atlanta Fed are forecasting even weaker growth at 0.5%, so a downside surprise might be possible.

The core PCE price index might also print a slightly slower increase in price levels of 0.2% versus the earlier 0.3% gain, possibly dampening Fed tightening hopes by mid-2022. A stronger than expected read, on the other hand, could bring plenty of upside for the Greenback since it might convince the Fed to hike earlier.