The performance of the British pound against other majors has grabbed a lot of attention during the last couple of weeks.
GBP/USD Is Ready for Reverse Up
2021-09-17 • Updated
GBP/USD is moving inside the ascending channel. Since it’s in the lower part of this channel, the pair should reverse up and continue moving in zig-zag.
However, fundamental factors ruined that plans. The UK has published poor retail sales for August. Analysts forecasted the 0.5% growth, while the actual numbers showed a drop of 0.9%. Thus, the pair is moving back and forth near 1.3785 as technical and fundamental factors are opposite in the short term.
On Wednesday, the report revealed that the UK inflation reached a 9 year high in August, so the Bank of England can start taking actions earlier than the markets expect. The bank may start discussing the tightening: hint at hiking rates or cutting bond buys. If it happens, the GBP will surge.
The long lower tails signal us that bears were trying to push the price lower, but by the end of the sessions more bulls appeared, and they pushed the price higher. In other words, lower prices were rejected, so the price moved up. That’s why the price is likely to go up in the next session as well.
Thus, we might assume if the pair manages to close above the 23.6% Fibonacci retracement level of 1.3810, it may jump to the next round number of 1.3825 near the 38.2% Fibo level. Support levels are the recent lows of 1.3780 and 1.3750.
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