The GBP/USD currency pair on Friday bounced off the current yearly lows of about 1.2851 to top 1.2940 after the latest round of US PMI data. The currency pair plunged from a high of 1.3050 at the start of the week to bottom just above 1.2850. It has since recouped nearly 50% of the losses following Friday’s rebound.
The currency pair has now ventured into overbought levels of the RSI indicator in the 60-min chart amid increased buying pressure. This could trigger the next pullback. The pair is also facing moving average resistance from the 100-hour SMA.
GBP/USD Fundamentals Overview
From a fundamental perspective, the GBP/USD currency pair is trading at the back of a relatively busy period in the UK market. On Tuesday, the UK claimant count change for January beat the expectation of 22k with 5.5k. However, the average 3-month earnings for the period ended December failed to meet expectations. The figure grew 2.9% and 3.2% (including and excluding bonuses) missing the expectations of 3.0% and 3.3%, respectively.
On Wednesday, CPI for January beat the (MoM) and (YoY) expectations of -0.4% and 1.5% core, with -0.3% and 1.6%, respectively. The retail price index for the month also outperformed the (YoY) expectation of 2.6% with 2.7% while the PPI input n.s.a outshone the January estimate of -0.1% with 2.1%. UK retail sales also impressed on Thursday beating expectations on all counts.
In the US, Markt Manufacturing and Services PMIs missed expectations on Friday. The PMI composite was in line while existing home sales narrowly beat the expectation of 5.43M with 5.46M.
GBP/USD Technical Analysis (the 60-min Chart)
Technically, the GBP/USD currency pair appears to be trading under intense short-term bullish pressure following Friday’s rebound. The currency pair has since ventured into overbought levels of the RSI. However, it faces strong moving average resistance from the 100-hour SMA.
Therefore, the bulls will be targeting short-term profits at around 1.3000 or higher at 1.3050. On the other hand, the bears will target pullback profits at around 1.2895 or lower at 1.2851 going into next week.
GBP/USD Technical Analysis (the Daily Chart)
In the daily chart, the GBP/USD currency pair appears to have completed a major reversal in the market sentiment. The pair bottomed at around 1.1953 in September last year and has since gone on to top 1.3517. It appears to be facing strong resistance around 1.3250, which could trigger the next reversal.
Therefore, the bears will be targeting pullback profits at around 1.2757 or lower at 1.2473. On the other hand, the bulls will hope to retain bullish control by targeting profits at around 1.3217 or higher at 1.3520.