The pound has continued to increase even if the USDX has managed to recover. GBP/USD has reached a strong resistance area, a valid breakout suggests more gains ahead. On the other hand, a reversal pattern here could signal a corrective phase in the short-term.
Probably, the price will change little today as the traders will wait for tomorrow's UK and US data. GBP could resume its appreciation if the UK's GDP, Industrial Production, Manufacturing Production, and the Goods Trade Balance will come in better than expected.
Do not forget that the US is to release its inflation data and the Unemployment Claims report.
GBP/USD Breakout?
GBP/USD is challenging the upward channel's resistance and the R1 (1.3262) static resistance level. Failing to close and stabilize above these upside obstacles could attract the sellers into the game.
An upside valid breakout will suggest that the pair will continue to increase with the first upside target at the second warning line (wl2). GBP/USD could form a downward movement if the price stabilizes under the channel's upside line and below the R1.
- GBP/USD Trading Tips
Buy from a valid upside breakout from the ascending channel and above R1 (1.3262). A new higher high closing above 1.3312 signals that GBP/USD could take out the resistance represented by the second warning line (wl2). This scenario will announce a larger upside movement.
Sell from a new false breakout above the mentioned resistance levels, a bearish engulfing, or a retest followed by a strong drop. The Pivot Point (1.3058) could be used as a downside target. GBP/USD could drop again if the US Dollar Index registers a bullish momentum.
