GBPUSD holds a neutral bias near the highest level since June 2016. The market became overbought after the recent rally from 1.2773 stalled at a high of 1.3656 on September 20. This was indicated by the daily RSI rising above 70. RSI has since eased back below this level and is flat, suggesting that upside momentum has faded.
GBPUSD has been trading sideways between 1.3430 and 1.3656 since mid-September following rapid gains from the end of August. A break below the range-low of 1.3430 would target the key 1.3400 level. Below this, the 1.3200 handle comes into view, with support expected at the September 14 low of 1.3148. Another extension lower would indicate that the recent bullish phase has ended.
The broader trend higher in the GBPUSD remains intact and is supported by the bullish alignment of the 50-day and 200-day moving averages. However, the 1.3656 peak seen earlier this month is acting as a solid resistance and it would be quite a challenge to break above it. The odds of a move above this peak in the near-term are low and GBPUSD is expected to remain neutral.
