Last month GBPUSD broke out of a big head and shoulders bottom. This week, the 50-day average is moving back above the 200-day average a golden cross that confirms a new uptrend is underway in Cable. This comes in a week where the currency pair is challenging $1.3000 and a number of UK economic announcements are due.
In early April, GBPUSD broke out over $1.2700 completing a head and shoulders base that formed over a six month period following last summer’s massive Sterling selloff. This breakout signalled the start of a new uptrend.
Since then, the pair has continued to trend upward, recently consolidating gains in the $1.2840 to $1.3000 trading range. Higher lows in both the pair and the RSI, plus a golden cross of the 50-day average above the 200-day average indicate continued underlying through this pause.
A breakout over $1.3000 would signal the start of a new upleg with next potential resistance near $1.3155 a 38% Fibonacci retracement of the post-Brexit selloff.
It’s a big week for UK news. The election campaign continues with polls still giving the Conservatives a huge lead over Labour and other parties projecting toward a substantial majority government.
Economic news for the UK could attract significant attention from traders. Inflation, employment and retail sales data are due over the course of Tuesday through Thursday. At last week’s Bank of England meeting the MPC voted to stand pat as is normal during an election campaign. There was one hawkish dissenter, and this week’s data may indicate how much pressure Governor Carney could come under to start raising interest rates sometime after the June 8th vote.