Hi, dear traders!
According to the H1 chart, GBP/USD on Friday bounced off the lower boundary of the ascending price channel upwards towards the 61.8% retracement level (1.3576). Today, the pair reversed downwards and returned to the Fibonacci level of 50% (1.3497) and the lower boundary of the price channel. If the price bounces upwards again, it could continue to rise towards the 61.8% retracement level. If GBP/USD closes below the corridor, it could decline towards the next Fibonacci level of 38.2% (1.3418). Friday's trading session was quite active for December 31. The pair's movements were unlikely to be influenced by EUR/USD's dynamics. The only information traders have at the moment is the latest COVID-19 data.
On average, about 200,000-250,000 new infections per day has been reported in the UK recently. Due to the Omicron strain's lower severity, the government has not enacted a lockdown like the Netherlands and Austria, despite the staggering amount of new cases in the country. Prime minister Boris Johnson is wary of a backlash against such measures, as well as the damage the already battered UK's economy could sustain. The pound sterling ignores the current coronavirus situation.
According to the H4 chart, the pair settled above the 50.0% retracement level (1.3457) and continues to climb towards the next Fibonacci level of 38.2% (1.3642). The quote's trajectory is quite unclear, and most emerging divergences have turned out to be false. If GBP/USD settles below the 50.0% retracement level, it could go down towards the next 61.8% level (1.3274).
US and UK economic calendar:
US - manufacturing PMI data (14-45 UTC).
There are no events in the UK. The US manufacturing PMI data could influence traders somewhat, but it's unlikely to have a significant impact.
Outlook for GBP/USD:
Traders are recommended to open short positions if the pair closes above the ascending price channel on the H1 chart, with 1.3418 being the target. Long positions could be opened if GBP/USD bounces off the lower level of the price channel or 1.3497, targeting 1.3576.
