GBP/USD needs catalyst to drive recovery

on Nov 25, 2014

The US Gross Domestic Product is expected to rise by an annualized 3.3% in the third quarter, while Consumer Confidence in the country is forecast to increase to 96.0 in November from 94.5 in October.

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The British pound managed to reach the key resistance zone of 1.5720 – 1.5735 and it looks as though it may have the strength to head on towards the psychological level of 1.5800. Above here, it would run  into the 1.5875 barrier, which includes the 200-period SMA and the descending trend line.    

Given the current negative environment for sterling, I am not sure what could provide further strength to the bulls and drive the price back above the key resistance zone of 1.5720 – 1.5735. However soft US data, expected for release later today, could be the main catalyst for a further correction of the pair.

On the 4-hour chart, the pair is currently finding support from the 50-period SMA. A dip below that would trigger some stops and could open the door to further pressure on the key support level at 1.5630. From there, I would expect the bulls to push hard, and if they manage to win the battle then they could send the price higher towards the aforementioned zone. 

Technical studies support a further rise, since the

Efthivoulos Grigoriou

Technical Analyst

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