A possible push could be provided by the British CPI data to be released at 0930GMT. In case this cluster is surpassed, the Pound is expected to appreciate up to the 1.40 mark where the 200-hour and and the monthly PP are located. A further advance is unlikely, as the pair was unable to breach this psychological level last week.
Meanwhile, losses should be restricted by the weekly and monthly S1s near 1.37.
The Sterling closed the previous trading session by gaining 56 pips against the US Dollar. The rate’s failure to reach the bottom channel line on Friday and its subsequent surge was eventually followed by a breakout of the prevailing two-week channel down and the 55– and 100-hour SMAs near 1.3865.
The pair is currently trading in a short-term channel up. Its southern barrier is supported by the aforementioned SMAs, while the northern side—by the 200-hour SMA and the 38.20% Fibo retracement. This channel is likely to be respected during the first part of the day and maybe even further if the US CPI data do not introduce extensive volatility in the market.
The ultimate daily high should be the monthly PP at 1.40, while the nearest support is the distant weekly and monthly S1s at the 1.37 mark.
After hitting the weekly PP at 1.3913 on Wednesday morning, the Pound began edging lower and eventually breached the support of the 55– and 100-hour SMAs.
Similarly to other major currencies against the Greenback, the Sterling initially fell in the wake of solid US CPI data, but was subsequently driven by strong upside momentum within the following hours. As a result, the pair managed to advance up to the psychological 1.40 mark.
The rate might still trade slightly higher today; however, technical indicators support a possible fall in this session which is likely to be limited by the support of the 200-, 55– and 100-hour SMAs and the weekly PP circa 1.39.
Meanwhile, in case no fundamentals affect the rate in this session, the daily high is expected to be the weekly R1 at 1.4062.
The Sterling continues to advance against the US Dollar for the second consecutive day, driven by weaker US Dollar in the global market. The rate hindered slightly near the weekly R1 at 1.4062 on Thursday, but nevertheless gained the necessary momentum to reach a new two-week high of 1.4137 this morning.
It seems that the Pound might be due for further gains, especially if no resistance is limiting it until the 1.43 mark where the weekly R2 and the highest level since the Brexit vote are located.
This advance, however, might come after a brief correction southwards. A possible point of reversal could be the monthly PP and the 55-hour SMA at 1.40, while a strong bearish sentiment should send the rate for a test of the 100– and 200-hour SMAs and the weekly PP at 1.3932.
Check out our trading platform: