GBP/USD Price Forecast: Stands firm near mid-1.3400s, seems poised to climb further
GBP/USD attracts buyers for the third straight day amid a broadly weaker US Dollar.
Concerns about the UK’s fiscal outlook and BoE rate hike bets cap gains for spot prices.
The technical setup favors bulls and backs the case for a further appreciating move.
The GBP/USD pair gains positive traction for the third consecutive day on Friday and moves further away from its lowest level since early August, around the 1.3250-1.3245 region touched earlier this week. Spot prices currently trade around mid-1.3400s, or a one-and-a-half-week high touched on Thursday amid a broadly weaker US Dollar (USD), though the intraday uptick lacks bullish conviction.
Tuesday's disappointing UK employment data fueled speculations that the Bank of England (BoE) could continue cutting rates gradually. This, along with concerns over the UK’s fiscal outlook ahead of the crucial Autumn budget in November, is holding back traders from placing aggressive bullish bets around the British Pound (GBP) and turning out to be a key factor acting as a headwind for the GBP/USD pair.
From a technical perspective, the overnight breakout through the 100-period Simple Moving Average (SMA) on the 4-hour chart and a subsequent move beyond the 38.2% Fibonacci retracement level of the recent pullback from an over two-month top set in September favor bullish traders. Moreover, oscillators on the 4-hour chart have been gaining positive traction and back the case for additional gains for the GBP/USD pair.
Hence, some follow-through rise towards the 50% Fibo. retracement level, around the 1.3480-1.3485 region, looks like a distinct possibility. This is closely followed by the 1.3500 psychological mark, which, if cleared, will be seen as a fresh trigger for bullish traders and allow the GBP/USD pair to climb further towards the next relevant hurdle near the 1.3545-1.3550 region, or the 61.8% Fibo. retracement level.
On the flip side, any corrective slide now seems to find decent support near the 1.3400 mark. A further pullback could be seen as a buying opportunity near the 1.3355 region (23.6% Fibo. level), below which the GBP/USD pair could accelerate the fall towards the 1.3300 round figure. The downward trajectory could extend further towards a two-and-a-half-month low, around the 1.3250-1.3245 region, touched on Tuesday.
GBP/USD 4-hour chart
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