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GBP/USD Eyes Multi-Year High As Bulls Gain Strength

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The British Pound was among the best performers this Tuesday, extending its upward corrective movement against the greenback to 1.5411, reaching the 38.2% retracement of the 1.5817/1.5161 decline, by the pip. Pound's strength was the result of the announcement of a series of M&A, as Mitsui Sumitomo acquired Amlin for £3.5bln and MBK purchased Tesco’s South Korean business for £ 4.2bln on Monday.

The pair retreated from the high, but found intraday buying interest around 1.5350, now the immediate support. Technically, the 1 hour chart shows that 20 SMA heads sharply higher below the current level, whilst the RSI consolidates around 66. The Momentum indicator however, is heading lower from overbought territory, not enough to confirm a bearish breakout, but maintaining the upside limited in the short term. In the 4 hours chart, the technical indicators maintain a strong upward momentum, despite being in overbought territory, whilst the 20 SMA is finally turning north well below the current level, supporting additional gains on a break above the 1.5410 level.

Support levels: 1.5350 1.5315 1.5280

Resistance levels: 1.5410 1.5450 1.5490

Comments

vinayak1000's picture

The British Pound seems to be under pressure again during the European session. The current GBP/USD rate is 1.4867, after rising to 1.4912 during Asian hours. This Tuesday there hasn't been any news. Across the pond, the US will release some interest figures later today, with the December consumer confidence being an important data point.

In the meantime, the GBP/USD pair keeps its bearish tone. The 4 hours chart seems to signify that the price is going below its 20 SMA right now. A look at the technical indicators reveals that they are crossing their mid-lines towards the downside. Consequently, a key support level is at 1.4850. If that is so, the drop can extend towards the 1.4804 (last week low). This will be the case for the upcoming sessions in a rather slow manner. Now the upside is limited by sellers to about 1.4920, with a chance for a further jump to 1.4950. That level if broken will revert the present bearish trend.

vinayak1000