GBP/USD is on the back foot, trading under 1.38 after UK Retail Sales figures disappointed with -0.9% in August, worse than expected. Brexit uncertainty and dollar demand weighed on the pair earlier. Cable is at the 1.38 crossroad once again – will it rise or fall? There are forces pulling in both directions, but there are reasons to expect bulls will prevail. On Thursday, the dollar attracted safe-haven flows that came as US stocks suffered another down day – for no fundamental reason. US Retail Sales figures showed an increase of 0.8% in August, far better than a drop that was expected. On the other hand, inflation is off the highs, as shown by Consumer Price Index figures and by more recent surveys. On the other side of the pond, UK Retail Sales missed estimates and fell by 0.9% in August. However, contrary to the US, consumption is less central to the British economy. Moreover, the impact on markets from this publication is limited.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES : 

Pound/dollar has set three ascending low points at 1.3680, 1.3725 and 1.3780. This is a bullish pattern that implies further gains. While momentum on the four-hour chart is still to the downside, the currency pair has edged above the 100 and 200 Simple Moving Averages. The three levels mentioned above serve as support lines, and they are followed by 1.36. Looking up, resistance is at 1.3820, where the 50 SMA hits the price. Further above, the upside target is the quadruple top of 1.3895. 1.38729 is the nearby resistance on our chart which needs to be kept in regard because only a breakout above would confirm the sentiments favoring the bulls. On the bearish side a strong dovish stance with a breakout below 61.8% fibb i.e 1.3700 would provide bears with momentum generated enough to target 50% fibb retracement level at 1.3536. 

GBPUSD

Sep 17 2021

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