GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2814; (P) 1.2851; (R1) 1.2890; More…

GBP/USD’s strong rebound and break of 1.2932 suggests that fall from 1.3042 has completed at 1.2784. And the corrective rise from 1.2661 is still in progress. Intraday bias is back on the upside for 1.3042 resistance. Break will resume the rebound from 1.2661 and target 1.3212 resistance. We’d expect strong resistance from 1.3316 fibonacci level to limit upside to complete the rebound. On the downside, break of 1.2784 will bring deeper fall to retest 1.2661.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4099). The structure and momentum of the fall from 1.4376 argues that it’s resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.