After days of consecutive gains, GBPUSD is showing signs of a market correction on the 4-hour chart. The pair could test the ascending trend line connecting the lows of the price since April and might draw more buying support around the Fibonacci retracement levels.
The 50% Fibonacci retracement level lines up with the rising support area and the moving averages. The 100 SMA seems to be crossing above the 200 SMA, confirming that the uptrend might still carry on.
Meanwhile, stochastic is moving down and reflecting a pickup in selling pressure, probably enough to take GBPUSD down to the support area. RSI is also heading down, indicating that sellers are in control for the time being.
GBPUSD Fundamental Factors
The only report lined up from the UK today is the CBI industrial orders expectations, which might climb from -5 to 1 and reflect a pickup in activity. If so, the pair could resume its climb earlier than expected and before price tests the Fib support areas.
As for the US, durable goods orders data is up for release, with the headline figure expected to show a 0.6% decline and the core figure likely to print a 0.6% gain. Stronger than expected data could remind traders that the Fed might be able to hike interest rates by September and renew demand for the US dollar.
For now, it also looks like risk sentiment is favoring the lower-yielding US dollar, as traders are moving out of the European markets in anticipation of a Greek debt default. So far there has been no deal made in the emergency meeting early this week and traders now turn their attention to the EU Summit in the next few days. The lack of progress could keep European currencies like the pound weaker against the lower-yielding US dollar.
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