GBP/USD Technical Analysis: a Challenge to the Dollar's Strength
It is noticeable for forex traders that GBP/USD is singing alone and ignoring the strength of the US dollar, as the pair rose to the 1.2950 resistance f at the time of writing, after the recent correction attempts failed to break the 1.2800 support. Our expectations were that optimism about the future of the UK's fateful election will be the first and strongest supporter of the pair's gains as it determines the fate of Brexit and will set it at the end of January 2020. The latest polls conducted by YouGov confirmed that the Conservative Party lead dropped one point to 41 percent since the beginning of the week, and in return the Labor Party got two points and reached 34 percent. Although the Conservatives' progress has shrunk, they are still in a position to win the nation's election on Dec. 12, which supports the Sterling because the Conservatives are determined to complete Brexit as soon as possible by passing the Johnson Accord with the EU.
On the other side. The results of official data revealed that US GDP growth in the third quarter was 2.1% higher than 2% in the previous quarter, and more than expected, and the implication is that growth in the US did not slow in the third quarter, which is important because the signs of tension in the domestic economy has been instrumental in the Fed's October decision to cut interest rates for the third time this year. Also, US durable goods orders rose 0.6% last month, while markets were expecting a decline of -0.5%, while the core durable goods index, which excludes aircraft orders, rose 0.6% and markets were expecting gains of just 0.2%.
The Chicago PMI surprised markets by falling below expectations, rising only from 43.2 to 46.3, when the markets had expected an increase to 47.2. The index, compiled by the Institute for Supply Management, is a leading indicator of activity in the third largest city in the United States, and its modest rebound this month may have eased any further optimism about the economy.
According to the technical analysis of the pair: The GBP/USD bullish trend has gained momentum and will strengthen the further by pushing towards the 1.3000 psychological resistance. Keeping in mind that the continued narrowing of the gap between the Conservatives and the opposition Labor Party will negatively affect the pair's trends in the coming days. On the downside, according to the pair's performance on the daily chart, a drop below 1.2800 support will strengthen the bearish momentum and increase selling towards lower buying levels, and thus reverse the trend. Overall, we still prefer to buy the pair from every bearish level.
As for the economic calendar data today: Today does not bring any important US or British data. There will be a US Thanksgiving holiday which will affect liquidity in the market.
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