Support at GBPUSD’s rising trend line seems to be holding and the impulse forex wave is set to take place. Price is finding support at the 50% Fibonacci retracement level, which lines up with the 1.5500 major psychological mark.
At the same time, stochastic is heading north from the oversold area, reflecting a buildup in buying momentum. This could take the pair up to the previous highs at the 1.5800 major psychological mark or higher.
Forex Wave Pattern
The short-term exponential moving average is safely above the long-term EMA for now, confirming that the uptrend is likely to stay intact and that the forex wave higher might take place sooner or later. However, the EMAs are edging closer together, suggesting the possibility of a downward crossover.
If that happens, GBPUSD could be in for a deeper forex wave correction or possibly a selloff. This could take price down to the support area around the 1.5000 major psychological level.
The UK retail sales release today might be a catalyst for a bounce, as the report could show a 0.4% rebound for April. This should be a decent recovery from the previous 0.5% slide, although a stronger reading might be needed before GBPUSD is able to go on its impulse forex wave.
As for the US, only the existing home sales and Philly Fed index are lined up, both of which might not be enough to spur the currency in a strong direction. The recently released FOMC minutes showed that an interest rate hike in June is unlikely, causing demand for the US dollar to weaken slightly.
Meanwhile, the BOE minutes showed that policymakers are hopeful that the economy could still recover soon, dismissing the recent slump in inflation as temporary. They noted that price levels could still move closer to their 2% CPI target later on and that their next move is still likely to be a rate hike.
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