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GBP/USD Technical Analysis: Inching Toward June Highs

GBP/USD Technical Analysis: Inching Toward June Highs

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • GBP/USD Technical Strategy: Flat
  • Pound Breaks from Congestion, Eyeing June High
  • Larger Trend Still Bearish But Short Entry Absent

The British Pound has broken higher out of a long-standing congestion range, with prices now on pace to challenge the resistance near mid-June highs against the US Dollar. A long position attempting to chase their pair higher appears unattractive however. Sterling has notably lagged the other major currencies in their recent upside reversals against the greenback. With that in mind, the underlying strength of the UK unit seems suspect considering its apparent inability to capitalize even as the greenback tumbles to multi-month lows against other top counterparts.

Furthermore, longer-term trend dynamics warrant attention. GBPUSD fell for seven consecutive months from highs recorded in July 2014 before beginning to carve out a bottom that would ultimately translate to the current recovery in early 2015. The previous such losing streak in the second half of 2008 was followed by a corrective rebound in excess of 26 percent. By contrast, the current upswing has fallen short of 10 percent thus far. On balance, that puts the latest upswing well within the bounds of a correction along the way to the formation of a new selling opportunity in line with the larger trajectory. An actionable trade setup is absent for now however.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.