GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3120; (P) 1.3146; (R1) 1.3173; More

GBP/USD spiked higher to 1.3214 but quickly retreated. At this point, further rise is still expected in the pair. Rebound from 1.2661 might extend towards 1.3316 key fibonacci level. However, as such rebound is seen as a corrective move, upside should be limited by 1.3316 to bring near term reversal. On the downside, break of 1.3042 resistance turn support will argue that rebound from 1.2661 might be completed. In such case, intraday bias will be turned back to the downside for 1.2784 support to confirm.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it’s resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

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