The GBP/USD saw some decent retracement on Monday from the strong current bullish trend after topping out at 1.68213 to form a resistance. Trade volumes were expected to remain thin on Monday, with U.S. markets shut for the President’s Day holiday.
In the short term picture, intraday bias remains slightly on the downside with RSI, Stochastic and MACD on the 1hour time-frame signaling more selling off could be seen in the pair to form a wave 2(Elliot wave) before commencing a fresh buy run.
Demand for sterling continued to be underpinned after the Bank of England revised up its forecast for growth in 2014 in last week’s quarterly inflation report, and indicated that it may raise rates as soon as next year.
In the medium and long term picture, GBP/USD remains in a strong up trend as price is finding it hard to penetrate the 55EMA on the 1hour charts, as price consolidated and bounced off from the Moving Average. A break of 1.68213 resistance would resume the bullish run and price is expected to rise to the 1.7000 zones.
A key economic indicator to watch out for is the CPIy/y which is scheduled to be released today during the London session. A disappointing figure might weaken the GBP currency and more selling off could be seen. However an improve data would spark up the current uptrend and more demand for the pair would be inevitable.