GBP/USD Forecast: Back on the bullish track

21.05.2014 14:33:26

The GBP/USD broke to the upside even before fundamental data show a strong advance in UK retail sales, strongest reading in a decade, sending the pair up to 1.6921; BoE Minutes released along with retail sales resulted pretty hawkish, with market paying strong attention to some wording about “rate decision becoming ‘more balanced’ for some”, meaning votes about rising rates may start to split sooner than later.

Anyway, the GBP/USD advanced above the daily descendant trend line coming from this year high of 1.6995, and holds now around the 1.6900 figure. The 4 hours chart shows also indicators bouncing higher from their midlines, and 20 SMA maintaining a bullish slope below current price, all of which supports further gains in the pair. 1.6920 is in fact a strong static resistance area, so some consolidation below it is likely before next move. Another price acceleration through the level should see it extending up to 1.6960, while once above this last next resistance and probable target comes at critical 1.7000 figure.

Pullbacks to the broken trend line currently at 1.6870 may attract late buyers, and as long as above it the upside remains favored. If below however, price will lose further momentum, and can slide back to 1.6820/30 price zone.