GBPUSD Price and Analysis
- US dollar nudges lower on midterm election result but losses are muted.
- Technical set-up could prove enticing for longer-term Sterling bulls.
GBPUSD Rallies After US Midterm Election Results, Brexit Sentiment
With the US midterm election results now in - Democrats regain House of Representatives and Republicans retain the Senate –GBPUSD has touched a three-week high in early trade. The result, expected by the market, has seen the US dollar drift lower but the greenback looks underpinned. Sterling continues to benefit from a more positive Brexit background with talk that a deal is getting closer if the Irish border issue can be resolved. Reports of a compromise deal between the EU and UK continue to circulate although the EU remains adamant that there will be no compromise on the border issue and that an all-weather backstop is necessary.
GBPUSD is nearing a level where three indicators collide, and if broken, this could provide a platform for the pair to move higher. The daily chart shows the September 20 high at 1.32966 just below the 200-day moving average at 1.33079 and the 38.2% Fibonacci retracement at 1.33170. A move through these levels leaves the 50% retracement level at 1.35190 as the next target. The RSI indicator continues to point higher and still has room to go before reaching overbought territory. In addition, there are seven higher highs candles in a row providing further evidence of the current, positive, market set-up.
GBPUSD Daily Price Chart November 7, 2018
GBPUSD Retail Sentiment Datashow that 65.0% of traders are net-long, a contrarian bearish market indicator. However, recent daily and weekly positional changes suggest that GBPUSD may move higher despite the net-long positioning.
--- Written by Nick Cawley, Analyst
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