GBP/USD Signals Bullish Continuation After Positive UK Data

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GBP/USD Signals Bullish Continuation After Positive UK Data

UK Data today (5/21) helped boost the UK sterling.

BoE Meeting Minutes:

The meeting minutes for the policy statement on the 8th of May had a hawkish tone. The committee saw a “less fragile” recovery in a “benign” global backdrop. Traders and investors are solidifying expectations that the BoE will raise interest rates by mid-2015.

Retail Sales:
April (m/m): 1.3%
Forecast: 0.4%
March (m/m): 0.5% (revised up from 0.1%)

April (y/y): 6.9%
March (y/y): 4.8%

Retail sales grew faster than expected and the annual rate is the highest since 2002.

The combined hawkish tone of the MPC meeting minutes and the better-than-expected retail sales helped boost the GBP.

GBP/USD 

gbpusd 5/21
(gbpusd 4h chart, 5/21)

The GBP/USD had a downswing last week from 1.6997 to 1.6730. This started some bearish momentum, and broke below a rising trendline. However, this week, the pullback so far is suggesting bullish continuation as price broke above a few resistance factors:

Above Resistance:
1) 1.6873 resistance pivot, 1.69 psychological handle, 1.6913 resistance pivot.
2) The 4H moving averages (200,100,50)
3) Pushed RSI above 60 and to 70, showing lost of bearish momentum and possible start of bullish momentum in the 4H chart.

Bullish Scenario:
The market might be tentative ahead of the FOMC meeting minutes due 2:00PM ET. Let’s say we get a pullback today, if the GBP/USD can hold north of 1.68, the bullish continuation scenario is still in play. In this scenario, GBP/USD is poised to test the 1.6990-1.70 area, with 1.7040 (2009-high) as the next resistance.

Below 1.68:
Below 1.68 however, the market remains in consolidation, and the 1.6730 and 1.6650 support pivots are back in the scope.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.