GBPUSD Bounce from Range Support – Oct 31, 2014

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GBPUSD Bounce from Range Support - Oct 31, 2014

GBPUSD Bounce from Range Support - Oct 31, 2014GBPUSD has been moving sideways for most of the month and has recently found support at the bottom of the range once more. Price bounced off the 1.5950 minor psychological support level and may be headed for the top of the range.

The resistance is located around the 1.6125-1.6150 levels, as the pair has been forming lower highs recently. Stochastic is still moving towards the oversold zone and reflecting selling momentum, which suggests that another test of support is possible before the pair heads any higher.

GBPUSD Forex Forecast

MACD is also suggesting a potential return in buying momentum as the indicator is starting to climb already. There are no GBPUSD event risks due from the UK while the US economy has a few medium-tier reports on tap that might trigger movement for the GBPUSD pair.

US personal spending and income, core PCE price index, and Chicago PMI are due today. Recall that the FOMC turned hawkish in their latest policy statement and strong data might add support to this bias, which might be positive for the dollar. In that case, a downside break from support and a longer-term selloff is also possible.

Bear in mind though that while the latest US GDP reading was stronger than expected at 3.5%, traders didn’t push the US currency any higher for the time being. This was because most of the growth was spurred by higher government spending and not so much actual economic improvements. If the medium-tier US data confirms this, the US dollar might be in for more losses to the pound at the end of this trading week.

Profit-taking might also drive GBPUSD price action for the mean time, as traders might be keen to exit trades and not keep them open over the weekend. If so, GBPUSD might make a strong bounce back to the top of the range and refrain from resuming the trend for now.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com