GBP/USD Pulls Back Off 5-Month Highs After BoE Rate Decision

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The GBP/USD currency pair on Friday pulled back off the current 5-month highs of about 1.3187 to trade at about 1.3079 after BoE’s rate decision. The currency pair continues to trade within an ascending channel amid increased bullish pressure.

Friday’s pullback pushed the pair below the 100-hour SMA line and slightly above the 200-hour counterpart in the 60-min chart. It also prevented the pair from venturing into overbought levels of the 14-hour RSI. It is now trading closer to oversold levels.

GBP/USD Fundamentals Overview

From a fundamental perspective, the GBP/USD currency pair is trading at the back of a relatively busy period in both markets. On Thursday, the UK’s Bank of England voted to keep the base interest rate unchanged at 0.1%. Earlier in the week, the Markit Manufacturing PMI for July narrowly missed the expectation of 53.6 with 53.3. The Services PMI also came short of 56.6 with 56.5. On the other hand, the UK Markit Construction PMI beat the expectation of 57 with 58.1.

In the US, the non-farm payrolls for July beat 1.6M with 1.763M on Friday. The average hourly earnings for the month also outperformed the estimate of 4.2% (YoY) with a 4.8% growth. The labor force participation rate slightly beat 61.1% with 61.4% while the unemployment rate of 10.2% was also better than the expected rate of 10.5%. Earlier in the week, the ISM Manufacturing PMI beat expectations. The ISM Services PMI also outperformed estimates on Thursday.

GBP/USD Technical Analysis (the 60-min Chart)

Technically, the GBP/USD currency pair appears to be trading within an ascending channel in the 60-min chart. This indicates a short-term bullish bias in the market sentiment. The pair recently pulled back after facing trendline resistance. It is now closer to oversold levels of the 14-hour RSI.

The bulls will be targeting rebound profits at around 1.3130 or higher at 1.3187. On the other hand, the bears will look to pounce on short-term profits at around 1.3033 or lower at 1.2974.

GBP/USD Technical Analysis (the Daily Chart)

In the daily chart, the GBP/USD currency pair appears to have recently made a bullish breakout off an ascending wedge. This indicates a strong long-term bullish bias in the market sentiment. The pair is now in overbought levels of the 14-day RSI.

The bulls will be looking to extend the current gains towards 1.3300 or higher to the 100% Fib level at 1.3519. On the other hand, the bears will target long-term pullback profits at around 61.80% and 50% Fib levels at 1.2710 and 1.2462, respectively.

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