GBP/USD has successfully close above 1.56 resistance for the first time since trading lower back on 14th Feb. This should be bullish in itself, but price has also managed to trade above the rising trendline (which characterized the recovery rally back in March) in the process, adding further bullish bias. Furthermore, price manage to successfully avert a bear cycle confirmation from the Stochastic Indicator, with the Stoch line threatening to break 80.0 in conjunction with the 1.56 resistance holding. This would have been a strong bearish signal, and the full avoidance of what could have been a validation of Jan’s decline is a testament of current bullishness, which is aiming for 1.60 with a consolidation zone around 1.58 standing in its way.
Fundamentally, UK’s recovery is getter on track. Recent PMI data has been overwhelming positive, while today’s employment data showed that unemployment figure has fallen, though the headline unemployment rate remains at 4.5%. Recent surveys also indicated that UK companies do plan to recruit more staff in 2H 2013. However not everything is rosy though, with yesterday’s Manufacturing Production showing a shrinkage in the industry, though Industrial Production managed to eke out a 0.1% expansion. The NIESR GDP estimate is also slightly lower than before, coming in at 0.6% versus a previous 1.0%. Nonetheless, it is from these slightly depressing figures where current bullish sentiment shines. Price has managed to claim victory over 1.56 despite the slight disappointment, which goes to show that current sentiment may be able to enjoy strong follow-through for June if not the rest of 2013.
Continue to watch GBP/USD and check for price actions around support levels when the inevitable short-term pullback occurs. If the bullish sentiment remain robust, it is likely that price will be able to shrug off short-term technical pullbacks and go back to higher highs and higher lows eventually. If 1.60 is broken, 1.64 will be the next bullish target and if that level is cleared, we could see Pound Sterling potentially moving back up to pre financial crisis levels once more.
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