The GBP/USD currency pair has put together some excellent bullish momentum over the recent trading sessions. That big increase came on the heels of a great performance on Tuesday. Adventurous traders will be awaiting next week’s release of UK GDP data with bated breath. Recent technical indicators for the pair point to a bullish short-term scenario.
On Tuesday, GBP/USD soared by 1%, forming a bullish engulfing pattern on the daily chart. This pattern usually means that a reversal is coming in market trends. It appears to have kept a floor under them, setting the stage for even more upward movement. The duo rocketed through the Fibonacci 61.8% retracement point. This latest move is a clear indication of bullish demand – one that indicates the bullish trajectory could extend further.
At present, GBP/USD has a number of key resistances lying in wait that will be important in dictating the pair’s direction in the short-term. The nearest resistance is at 1.3360, followed closely in line by 1.3402. Should the currency cross maintain its upward trend, the pair may encounter additional resistance at 1.3444. In the long-term, it may even penetrate the important psychological level of 1.3500.
Support levels are equally important in GBP/USD’s trading landscape. The first support level is 1.3270 followed by 1.3232. If the bears come back in force, the pair may find support at 1.3200 and then 1.3162.
Some analysts argue that GBP/USD’s price action since late September is already indicative of a bear-trap scenario below the Fib 38.2% retracement level of 1.3444/1.3139. Short-sellers would have undoubtedly been caught-out by the sudden spike. This latest development has served to deepen the kudos-fueled bullish sentiment amongst traders.
Traders are certainly looking into their economic calender with a spotlight and heavy focus on the release of the UK GDP data. The result of this data is likely to be a major influence on how GBP/USD performs in the days ahead. If the GDP report is as strong as hoped, the pound would be well disposed to build on its gains and might even break the short-term key resistances. On the flip side, lackluster data might force a re-assessment of the pair’s bullish path.