GBP/USD targets $1.7320
Authored by Kira Iukhtenko
Nothing can stop the rally of the British pound. On Tuesday the cable jumped to a fresh 6-year high of $1.7145, inspired by the strong UK manufacturing PMI. Data showed that the UK manufacturing accelerated to its highest level in 7 months.
As can be seen from the monthly chart, the medium-term technical picture for GBP/USD now looks strongly bullish: the buyers smashed all the resistance levels, clearing the way to the next significant level at $1.7320 (50% Fibo). The market formed a strong bullish engulfing candle in June. The pair fixed above the 100-month MA ($1.6965) and broke above the bearish monthly Ichimoku Cloud.
Chart. Monthly GBP/USD
The pair is clearly overbought, but nevertheless the H4 technical picture stays bullish. Hold long positions as long as the $1.7060 support area holds. Next support lies at $1.7000, $1.6950 and $1.6900. The $1.6900 mark is expected to limit the corrective declines.
Chart. H4 GBP/USD
Watch the UK Construction and Services PMI indices on Wednesday and Thursday. Note that the forecasts are not so optimistic - weak figures could finally cool the market optimism down, and let the market correct a part of the recent rally.