GBPUSD has started to trend higher since its March lows, moving above an ascending trend line on the 4-hour time frame. Price just bounced off the trend line support, which lines up with the 61.8% Fibonacci retracement level on the latest swing low and high and the 200 SMA.
The 100 SMA is above the 200 SMA so the path of least resistance is still to the upside. This means that GBPUSD might have enough energy to climb to the swing high just below the 1.4800 major psychological level.
Stochastic is on the move up, confirming that buyers are in control of price action from here. The pair is currently moving out of an area of interest which held as resistance in the past. A break below this region, however, could trigger a downtrend for the pair.
Event risks today include the UK CPI release, although no changes from the earlier 0.5% reading for the headline figure and the 1.5% core figure are expected. For tomorrow the UK jobs report is due and a 4K increase in claimants is eyed, possibly enough to keep the unemployment rate steady at 5.1%. The average earnings index is expected to fall from 1.8% to 1.7% to show slower wage growth and weaker inflationary pressures.
Stronger than expected data, however, could allow the pound to hold on to its gains and go for more. This could indicate the UK economy is on relatively strong footing even with the EU referendum coming up.
Still, opinion polls are showing a slightly larger lead in favor of staying in the EU, which has been bullish for the pound so far. After all, this would allow the economy to avoid further uncertainty and continue to take advantage of current trade agreements and other benefits in the bloc.
To contact the reporter of the story: Samuel Rae at email@example.com