The Pound Sterling remains on a bullish trajectory amid geopolitical developments and political turmoil in the US, while the Relative Strength Index shows signs of exhaustion, hovering above overbought territory. 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 remains on a bullish trajectory amid geopolitical developments and political turmoil in the US, while the Relative Strength Index shows signs of exhaustion, hovering above overbought territory. 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.
Key Economic Events
Monday 12:30 pm (GMT+0): Empire State Manufacturing Index (SD)
Monday 04:00 pm (GMT+0): Fed Chair Powell Speaks (USD)
Tuesday 12:30 pm (GMT+0): CPI m/m (CAD)
Tuesday 12:30 pm (GMT+0): Median CPI y/y (CAD)
Tuesday 12:30 pm (GMT+0): Trimmed CPI y/y (CAD)
Tuesday 12:30 pm (GMT+0): Core Retail Sales m/m (USD)
Tuesday 12:30 pm (GMT+0): Retail Sales m/m (USD)
Tuesday 10: 45 pm (GMT+0): CPI q/q (NZD)
Tuesday 10: 45 pm (GMT+0): CPI q/q (NZD)
Wednesday 06:00 am (GMT+0): CPI y/y (GBP)
Thursday 01:30 am (GMT+0): Employment Change (AUD)
Thursday 01:30 am (GMT+0): Unemployment Rate (AUD)
Thursday 06:00 am (GMT+0): Claimant Count Change (GBP)
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)
Thursday 12:45 pm (GMT+0): ECB Press Conference (EUR)
Thursday 12:30 pm (GMT+0): Unemployment Claims (USD)
Friday 06:00 am (GMT+0): Retail Sales m/m (GBP)
Friday 12:30 pm (GMT+0): Core Retail Sales m/m (CAD)
Friday 12:30 pm (GMT+0): Retail Sales m/m (CAD)
Technical Analysis
After rebounding from the lower Bollinger Band, the GBPUSD exchange rate experienced a rally and has since remained within proximity of the upper Band, signifying an upward trend. Nevertheless, the widening of the Bands indicates heightened market volatility and overbought conditions. Both the 50-period Exponential Moving Average (EMA) and the Momentum oscillator validate the bullish perspective. Specifically, prices are trading above the EMA, and the Momentum oscillator shows values surpassing the 100 baseline. Conversely, the Relative Strength Index has surpassed the 70 line, indicating an overbought market. Upon detailed analysis, a negative divergence between the GBPUSD and the Momentum oscillator is identifiable, prompting a cautionary signal for a potential correction.
Potential Upside Targets
If the bulls manage to maintain control of the market, traders may consider the following three potential upside targets:
1.29908: The initial price objective is seen at 1.29908, corresponding to the highest price achieved in 2024.
1.31317: The second price objective is 1.31317, which aligns with the R2 resistance level calculated using the standard Pivot Point method applied to the weekly timeframe.
1.32450: An additional resistance level is determined at 1.32450, representing the 423.6 percent Fibonacci Extension drawn from the swing high of 1.26344 to the swing low of 1.24457.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
1.29182: The initial downside target is set at 1.29182, corresponding to the weekly Pivot Point.
1.28605 The second level of support is estimated at 1.28605, aligning with the peak marked on July 12.
1.27047: The third line of support is calculated at 1.27047, corresponding to the S2 support level calculated using the standard Pivot Point method applied to the weekly timeframe.
1.26154: An additional line of support is estimated at 1.26154, representing the daily low marked on July 2.
Conclusion
In summary, while the GBPUSD pair remains uptrend, several technical indicators indicate that the market is overbought, suggesting potential exhaustion. The forthcoming economic data releases will be crucial for traders to monitor, as they could significantly impact the currency pair's direction.