**FxWirePro: GBP/USD Consolidating Around 1.3540, Room for Further Gains**
*Original analysis attributed to the FxWirePro team via EconoTimes.*
**Overview**
The GBP/USD currency pair has been navigating a period of consolidation around the 1.3540 level, as market participants evaluate both technical indicators and key macroeconomic drivers. The pair maintains an underlying bid tone, signaling potential for further appreciation. This article analyzes recent movements, contributing factors, technical setups, and what traders can expect in the coming sessions.
**Recent Developments**
– **Steady Uptrend**: Over recent trading sessions, GBP/USD has demonstrated resilience, rebounding from previous lows and sustaining upward momentum.
– **Consolidation Phase**: The pair is currently trading around the 1.3540 mark, consolidating its gains and building a new base.
– **US Dollar Weakness**: The generally softer tone of the US dollar, influenced by global risk sentiment and dovish commentary from the Federal Reserve, is aiding the pound’s advance.
– **UK Data and Policy Drivers**: Optimism around the UK economy, supported by robust performance in key sectors and expectations surrounding monetary policy, continues to favor GBP strength.
**Key Drivers Behind the Pair’s Movements**
1. **Macroeconomic Data**
– Recent UK economic releases have underscored a recovery trajectory.
– Retail sales, service sector activity, and labor market data have surpassed market expectations.
– In the US, inflation and employment data remain in focus, but mixed results have limited the dollar’s recovery.
2. **Monetary Policy Expectations**
– The Bank of England (BoE) has signaled a willingness to act against inflation, with traders pricing in future rate hikes.
– The US Federal Reserve has maintained a patient approach, emphasizing data-dependence and sparking a dovish outlook that weighs on the dollar.
3. **Risk Sentiment**
– Global risk-on sentiment, driven by optimism about post-pandemic growth and accommodative policies, favors the pound.
– Shifting investor appetite and demand for higher-yielding assets also put downward pressure on the US dollar.
4. **Technical Factors**
– GBP/USD has broken above key resistance zones, flipping technical bias in favor of bulls.
– Consolidation below 1.3550 suggests the potential for another leg higher, backed by supportive technical patterns.
**Technical Analysis**
*Price Action:*
– GBP/USD has managed to stage strong recoveries from key support at 1.3400, advancing above 1.3500 and consolidating around 1.3540.
– Momentum indicators remain positive, affirming further upside potential.
*Support and Resistance Levels:*
– **Immediate Support:** 1.3520 (recent swing low)
– **Next Support:** 1.3470 (trendline support)
– **Key Resistance:** 1.3560 (recent high and psychological barrier)
– **Further Resistance:** 1.3600 (multi-week high and round number resistance)
*Moving Averages:*
– The pair trades above its 21 and 50-period moving averages on the 4-hour chart, solidifying short-term bullish momentum.
– Longer-term moving averages are turning higher, reflecting a potential shift in the underlying trend.
*Indicators:*
– **Relative Strength Index (RSI):** Hovering in the upper half of the range but not yet at overbought levels. This suggests there is room for further advancement before any corrective move occurs.
– **MACD (Moving Average Convergence Divergence):** Displays a bullish crossover, further reaffirming upside bias.
**Key Technical Observations:**
– The consolidation phase indicates an absorption of recent gains with strong underlying demand.
– If GBP/USD can sustain above 1.3540, bulls will likely target the 1.3600 area in the coming sessions.
– Failure to hold
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