Pound aiming higher still, despite dip – GBPUSD forecast

Intermediate
  • A positive tone for the Pound this week, building on the recovery effort seen for early October and from late September
  • This has partly been a reflection of the broader “risk on” theme that has seen global stock markets higher over the same period and the US Dollar broadly lower (as a safe haven currency).
  • The “risk on” theme has been driven by:
    • Anticipation of a strong Biden victory in the US Presidential election, which would hopefully avoid any transition of power issues (the financial markets hate indecision).
    • The coming together of the Democrats and Republicans to pass an economic relief package before the election.
  • Despite Trump indicating Tuesday that an economic relief package before the election would not happen, he has since overnight offered some hope again of a deal.
  • The Pound has also benefited in early October from positive soundings and hopes regarding the UK trade negations with the EU.
  • Here we now spotlight the technical analysis outlook for GBPUSD.

GBPUSD day trade outlook: Dip, but still risk to key 1.3007

A prod higher Tuesday to stall exactly at our key 1.3007 resistance level, to then setback below 1.2900/2892 supports to 1.2865, but whilst holding above the better 1.2819/05 area we still see upside forces from the early October push higher through various resistances, plus from the strong, latter September recovery to reverse above the September down trend line, to keep the risk to the upside Wednesday. 

Day trade setup

  • We see an upside bias for key 1.3007; a break here aims for the 1.3035/56 area and maybe 1.3100/05.
  • But below 1.2865 opens risk down to 1.2819/05; which we would look to try to hold. Below possibly aims for 1.2762.

GBPUSD intermediate-term outlook

The early September push below 1.2981 signalled an intermediate-term shift to a bear trend.

  • Downside risks: We see an intermediate-term bear trend to aim for 1.2644, 1.2480 and maybe 1.2251.
  • What changes this? Above 1.3007 shifts the intermediate-term bear trend to neutral; through 1.3239 to an intermediate-term bull trend.
gbpusd chart
6 Hour GBPUSD Chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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