GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3037; (P) 1.3085; (R1) 1.3142; More…

GBP/USD is staying in tight range below 1.3131 temporary top. Intraday bias remains neutral at this point. As long as 1.3002 minor support holds, further rise is mildly in favor. On the upside, above 1.3131 will target a test on 1.3297 resistance. For now, we’d expect strong resistance from 1.3316 key fibonacci level to limit upside to bring down trend resumption. On the downside, below 1.3002 minor support will turn bias back to the downside for 1.2921 first.

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.