FBS: unsinkable GBP/USD
Market talk about the bearish “double top” seems to have been premature: the cable has once again bounced from the $1.5900 hurdle due to the exceptionally strong UK construction and service PMIs. There was quite a strong support clustered in this area: daily Kumo, 23.6% Fibonacci from the summer uptrend, 50-day MA.
Demand on the GBP/USD keeps growing. Strong short-term resistance for the pair lies in the $1.6070/80 area (late-October resistance, H4 MAs). Rise above $1.6080 would open the way towards $1.6265.
We remain bullish for the cable as long as the $1.5900 hurdle holds. Fix below this mark would be a good selling opportunity with a target of $1.5550. Despite all the recent bullish developments, keep the weekly “bearish engulfing” candle in mind.
Today’s US non-manufacturing PMI at 16:00 GMT is the next risk-event for the cable (forecast: 54.2, prior: 54.4). A better-than-expected reading could push the pair to the downside. Tomorrow watch the UK manufacturing production at 09:30 GMT. The markets are expecting a 1.2% growth in October (September: - 1.2%). Strong reading would be a great impetous for the pair to extend the rally started on Monday.
Chart. Daily GBP/USD