In a notable address on Monday, Bank of England (BoE) Governor Andrew Bailey adopted a cautious stance, asserting that it was premature to consider rate cuts. He emphasized that borrowing costs might need to rise again if inflation persisted beyond initial estimates.
The GBPUSD trend remains bullish, affirmed by the ascending trendline, particularly validated by a hammer pattern during its second touch. However, recent price action is revealing signs of potential weakness, with the emergence of hanging-man and shooting star candlestick patterns, indicating a loss of momentum on the part of bulls.
Zooming in on the 4-hour timeframe, a crucial juncture is approaching as the price is anticipated to test the ascending trendline for the third time. Should the trendline hold, a modest upward move towards 1.2600 is plausible before a deeper bullish correction. Conversely, a break below the trendline could prompt support at the green box or the void area between EMA 50 & EMA 200.
The EMA 50 & EMA 200 exhibit a bullish configuration, featuring a fresh golden cross that emerged last week. This suggests a robust and relatively recent bullish trend, likely to persist for at least another week.
Furthermore, the MACD histogram and signal line project a bullish scenario, consistently hovering above the 0 level. Similarly, the RSI remains bullish as it hovers above the 40 level. Despite the caution expressed by Governor Bailey, the technical indicators, along with the recent golden cross, underline the resilience of the bullish momentum in GBPUSD. Traders will be closely monitoring key support and resistance levels for potential shifts in the ongoing trend.
Key Economic Releases to Watch Today
USD, Core Durable Goods Orders (MoM) (Oct)
Forecast 0.1% vs Previous 0.2%
USD, Initial Jobless Claims
Forecast 223K vs Previous 233K
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