Cable eyes a break above $1.26The pound has generally done better against the dollar since around the middle of last month amid moderately strong data from the UK considering the circumstances. Inflation, preliminary GDP and average earnings have all beaten expectations at least slightly this month. Meanwhile the dollar’s long uptrend against various currencies has mostly paused for breath in recent weeks as traders await further trade-related developments.
The area of $1.26 and the 100 SMA looks like quite a strong resistance which the price is currently testing. It’s questionable whether there’ll be a breakout from here given the overbought signal from the slow stochastic and the pound’s weak reaction to 19 February inflation, but if it does continue upward, the obvious medium-long term target would be around $1.28, near the 200 SMA. Before that, $1.27 also looks likely to be a significant resistance based on the presence of the 50% monthly Fibonacci retracement around there.
A break back below the 38.2% Fibo doesn’t seem likely unless sentiment shifts strongly in the next few days, but the price might retrace lower to retest the 50 SMA from Bands around $1.242. The next sustained direction might become more clear based on the reaction to American second estimate GDP and PCE on 27 and 28 February respectively.
This is my personal opinion, not the opinion of Exness. This is not a recommendation to trade.
