A quick look at GBP/USD or the pound versus dollar chart on the 1-hour time frame indicates a possible exhaustion of the pair’s latest rally. As you can see, price is stalling at the 50% Fibonacci retracement level and appears ready to resume its drop.
On this pound versus dollar chart, it is pretty evident that the 50% Fibonacci level lines up with a former support zone, which means that traders are watching that area very closely. Sell orders could be located in that region, as pound traders could jump on the chance to short the pair if UK data comes in weak.
For today though, data came in mixed as the mortgage approvals missed expectations but the M4 money supply report came in higher than the estimate. The net lending to individuals report came in line with consensus as it showed a 2.3 billion GBP reading.
Pound Versus Dollar Chart Trade Scenarios
If the current level holds as resistance, GBP/USD might find itself trading back down to its previous lows around the 1.6450 minor psychological level. On the other hand, buying pressure for the pound could take this pair up to the previous highs around the 1.6800 major psychological resistance.
The stochastic indicator on the 1-hour pound versus dollar chart shows that a rally might still take place soon, as the oscillator is already in the oversold region. This means that pound bears are exhausted and that bulls might still push for more gains.
Do watch out for the speech by BOE Governor Carney in today’s US trading session and also by Fed Chairperson Janet Yellen. These could spark a lot of volatility for GBP/USD, as both central bankers could clarify their current monetary policy bias. Hawkish remarks from the Fed combined with dovish words from Carney might push GBP/USD back to its previous lows.
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