GBPUSD is in a neutral phase and has been in a very narrow range since August 28. The pair is trading below the key 1.3000 level and above 1.2850.
GBPUSD hit a high of 1.2994 last Friday but upward pressure eased rapidly. The pair is more likely to trade sideways in the near term, based on the flat momentum oscillators. RSI has been hugging the 50 line for the past week while MACD is horizontal.
The market’s neutral outlook is expected to hold as long as prices remain capped by the 50-day moving average which is acting as resistance at 1.2973. Above this, the key 1.3000 level is strong resistance. A successful break of this level would target 1.3104 and then the August 3 peak at 1.3267.
The odds for a move lower are high if the 50-day MA keeps acting as a barrier to the upside. Immediate support is at 1.2851 (August 31 low). From here, 1.2773 is another support level (August 24) ahead of the 200-day MA at 1.2668. A deeper decline would bring about a strong bearish bias with scope to retrace all of the upleg from 1.2588 to 1.3267.
The near-term outlook for the pair is viewed as neutral but so is the medium-term picture, following the pull-back from the one-year peak of 1.3267.
