GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3101; (P) 1.3157; (R1) 1.3202; More…

GBP/USD’s rally resumed after brief consolidation and reaches as high as 1.3297 so far. Intraday bias is back on the upside with focus on 1.3316 key fibonacci resistance. Rejection from and break of 1.3096 support will be in line with our view. And that should indicate completion of corrective rise from 1.2661 and bring retest of this low. Nonetheless, firm break of 1.3315 will extend the rebound to next fibonacci level at 1.3721 instead.

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 1.4062). 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.