GBPUSD Forex Forecast – Testing 1.5500 Resistance Level

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GBPUSD is currently stalling at the 1.5500 area of interest once more, which has held as resistance then support in the past. This lines up with the 50% Fibonacci retracement level on the latest swing high and low on the 4-hour time frame and might keep gains in check.

Stochastic is indicating overbought conditions on the same time frame, suggesting that a move lower might take place. In addition, a bearish divergence can be seen since stochastic made higher highs from May 24 and June 10 while price made lower highs then. RSI is also in the overbought region, suggesting that sellers might take control of price action soon.

If that happens, the pair could move back to its previous lows near the 1.5200 major psychological level. Sustained bearish momentum could even lead to a break of these lows and a selloff until the longer-term support near 1.4600. On the other hand, if buying momentum stays in play, a higher pullback to the 61.8% Fib might take place.

GBPUSD Fundamental Factors

The path of least resistance is to the downside, as the Fed is on track to hike interest rates in September, based on the results of the latest jobs report. The May NFP reading came in much stronger than expected and was enough to assure most dollar bulls that the previous slowdown was just temporary.

Much could still hinge on the upcoming US retail sales release, which is slated to show a 1.1% gain in the headline figure and a 0.7% uptick in the core figure. An upside surprise could renew demand for the dollar and put GBPUSD back in selloff mode. On the other hand, bleak data could cast doubts on the potential rate hike in September and lead to more dollar weakness, possibly taking GBPUSD up to the 1.5800 area once more.

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