The Pound Sterling has been showing a sustained upward trend for the fourth consecutive week, indicating a positive trajectory characterized by a series of higher highs and higher lows. This trend is occurring in anticipation of the ECB Interest Rate Decision and the release of the Non-Farm Employment Change. Traders are expected to closely monitor the currency pair in light of the forthcoming release of significant economic data that could potentially impact currency valuations.
Overview
The Pound Sterling has been showing a sustained upward trend for the fourth consecutive week, indicating a positive trajectory characterized by a series of higher highs and higher lows. This trend is occurring in anticipation of the ECB Interest Rate Decision and the release of the Non-Farm Employment Change. Traders are expected to closely monitor the currency pair in light of the forthcoming release of significant economic data that could potentially impact currency valuations.
High Impact Economic Events
Thursday 12:15 pm (GMT+0): Main Refinancing Rate (EUR)
Thursday 12:15 pm (GMT+0): Monetary Policy Statement (EUR)
Thursday 12:30 pm (GMT+0): Unemployment Claims (USD)
Friday 12:30 pm (GMT+0): Employment Change (CAD
Friday 02:00 pm (GMT+0): Unemployment Rate (CAD)
Friday 12:30 pm (GMT+0): Average Hourly Earnings m/m (USD)
Friday 12:30 pm (GMT+0): Non-Farm Employment Change (USD)
Friday 12:30 pm (GMT+0): Unemployment Rate (USD)
Technical Analysis
The Pound Sterling has been on an upward trend since April 22, when it bounced off the support level of 1.22994, which marked the year's lowest price. Subsequently, the GBPUSD rose above the 50-period Exponential Moving Average (EMA) and developed a technical reversal pattern known as a failure swing in technical analysis. More specifically, the trough at 1.24457 was higher than the previous trough. Subsequently, the exchange rate exceeded the peak at 1.26344, indicating a bullish trend. Both the Exponential Moving Average and the Momentum oscillator support the positive bias for the Cable. In particular, prices are above the 50-period EMA, and the Momentum oscillator registers values above the 100 baseline, hence the uptrend. However, upon closer inspection, there is a negative divergence between the Momentum oscillator and the price, suggesting a possible consolidation or correction. Additionally, as the Bollinger Bands converge, the exchange rate will likely move sideways.
Potential Upside Targets
If the bulls manage to maintain control of the GBPUSD market, traders may consider the following three potential upside targets:
1.28936: The initial upside target is 1.28936, which corresponds to the highest peak of the year, which occurred on March 8.
1.29397: The second upside target is 1.29397, representing the 261.8 percent Fibonacci Extension drawn from the peak of 1.26344 down to the trough of 1.24457.
1.32450: An additional potential price objective could be identified at 1.32450, representing the 423.6 percent Fibonacci Extension of the most recent swing.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
1.27412: The initial price target is 1.27412, corresponding to the weekly Pivot Point estimated using the standard methodology.
1.26344: The second price objective stands at 1.26344, aligning with the peak of the most recent swing marked on March 3.
1.24457: The third potential downside target is estimated at 1.24457, representing the trough of the most recent swing, marked on May 9.
1.22994: An additional potential support level can be identified at 1.22994, representing the trough marked on April 22.
Conclusion
The British pound has been on the rise for the fourth week in a row, showing a bullish pattern with higher highs and higher lows ahead of the European Central Bank's decision on interest rates and the release of the Non-Farm Payrolls. The current upward trend in the GBPUSD market suggests that exchange rates may appreciate even further while, at the same time, technical signals point to a potential consolidation or correction. To navigate this volatile market, traders must stay on top of economic events, technical indications, and geopolitical changes so they can make informed trading decisions.