GBP/USD: Will the key resistance level give away?
The GBP/USD has been trading upwards in August and is currently hovering just below key resistance level at 1.5693, supported by modestly encouraging UK job data in the three months through June. Despite the markets have been recently pricing in more monetary easing to aid an economy struggling in deep recession, MPC members voted 9-0 not to add to the asset purchase program again after the BoE engaged in an aggressive expansion of its balance sheet already. As the effects of further QE for the real economy are at least questionable, a second round of aggressive intervention looks less and less likely. From a technical point of view, the market is starting to run into massive resistance at 1.57 with the bulls exerting upward pressure. At 1.5693 at the moment of writing the cable is hovering around the 38.2% Fibonacci retracement level from May’s high to June’s low. A break to the upside could push the cable further up to test the 50% Fibonacci level at 1.58. The recent bullish alignment of the 20 EMA over the 50 EMA on the daily chart along with the MACD signal line that has just crossed above the zero level and a stable RSI above 50 on the daily chart further support a bullish scenario. Key support level on the downside sits at 1.55. A break below this level could trigger a downward movement all the way back to June’s low at 1.5340.
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